Nvidia's China H200 sales stalled as Beijing blocks imports despite US approval

Nvidia's ambitious plans to tap into the Chinese AI accelerator market have hit a significant roadblock, with the company revealing it hasn't generated a single cent in revenue from H200 sales despite receiving US government approval to export the chips to China.

US Approval, Chinese Block

In early December, the Trump administration reversed an export ban that had previously restricted Nvidia's H200 accelerator sales to Chinese customers. The reversal came with a significant caveat: a 25 percent cut of revenue from these sales would go to the US government. While this arrangement allowed Nvidia to legally sell its 2023-vintage H200 chips to Chinese customers, the company is now facing an unexpected hurdle on the other side of the Pacific.

"While small amounts of H200 products for China-based customers were approved by the US government, we have yet to generate any revenue, and we do not know whether any imports will be allowed into China," Nvidia CFO Colette Kress stated during the company's recent earnings call.

The situation highlights the complex geopolitical landscape surrounding AI technology exports. While Washington has given its blessing for these sales, Beijing has not granted the necessary import permissions, effectively blocking Nvidia's entry into one of the world's largest AI markets.

Strategic Concerns

Kress's comments reflect growing concerns about technological decoupling between the US and China. She emphasized that American competitors in China, "bolstered by recent IPOs, are making progress and have the potential to disrupt the structure of the global AI industry over the long term."

This warning aligns with broader industry concerns about maintaining US leadership in AI. "To sustain its leadership position in AI… America must engage every developer and be the platform of choice for every commercial business, including those in China," Kress added.

These strategic concerns echo similar warnings from rival AMD and major partners including Microsoft, CoreWeave, and OpenAI, who raised comparable issues last spring about the risks of technological isolation.

Financial Impact

Despite the setback in China, Nvidia's financial outlook remains remarkably strong. The company expects to generate $78 billion in revenue during the first quarter of fiscal 2027, representing nearly 90 percent year-over-year growth.

This optimistic forecast comes on the heels of a stellar fourth quarter, where Nvidia reported profits of $42.96 billion on revenues of $68.12 billion. The datacenter business continues to dominate, accounting for more than 90 percent of revenues at $62.3 billion, while gaming, professional visualization, and automotive segments combined for just $5.6 billion.

For the full fiscal year 2026, Nvidia turned an impressive $120 billion profit on revenues of $215.93 billion, demonstrating the company's ability to maintain growth despite geopolitical challenges.

The Orbital Datacenter Debate

Beyond the China situation, Nvidia CEO Jensen Huang also weighed in on another futuristic technology discussion: orbital datacenters. While acknowledging the potential for space-based computing, Huang outlined significant technical challenges that make the economics currently unfavorable.

"The way that space works is radically different than how it works down here," Huang explained. "There's an abundance of energy, but solar panels are large, and there's plenty of space in space. The energy, the heat dissipation, it's cold in space. However, there's no air flow, and so the only way to dissipate that heat is through conduction, and the radiators that you need to create are fairly large."

Despite these challenges, Huang sees specific use cases where space-based computing makes sense. "One of the best use cases of GPUs in space is imaging. To be able to do imaging at very large, very high resolutions, extremely large scales and very, very fast, it's hard to do that by sending petabytes and petabytes of imaging data back here on Earth and doing that work, it's easier just to do it out in space."

However, not everyone shares Nvidia's optimism about orbital datacenters. Gartner analyst Bill Ray recently described the concept as "peak insanity," arguing that companies are "wasting money by pouring funds into the orbital datacenter 'bubble' because the economics do not work."

Industry Perspectives

The orbital datacenter debate reflects broader disagreements about the future of computing infrastructure. While Google is exploring space-based TPU clusters and Amazon founder Jeff Bezos predicts gigawatt-scale datacenters in orbit within two decades, Nvidia's more measured approach suggests the technology may be further from practical implementation than some enthusiasts believe.

Meanwhile, Elon Musk has positioned himself as a strong proponent of the concept, with plans to make orbiting datacenters a reality in the near future.

The contrast between Nvidia's pragmatic assessment of orbital datacenters and its ambitious growth projections for terrestrial operations underscores the company's strategic focus on near-term opportunities while maintaining awareness of longer-term technological possibilities.

As Nvidia navigates both the geopolitical complexities of the Chinese market and the technical challenges of emerging computing paradigms, the company's ability to adapt to rapidly changing circumstances will be crucial to maintaining its dominant position in the AI hardware market.