The U.S. Department of Commerce announced Tuesday that it has given permission to semiconductor giant Nvidia to sell its advanced artificial intelligence (AI) processors in China.

Nvidia’s second most advanced semiconductor, the H200, had been restricted by the U.S. government over concerns it would give China’s technology industry and military an advantage over the United States.

The Commerce Department said chips could be shipped to China if there was a sufficient supply of processors in the United States.

President Donald Trump said last month It said it would allow chips to be sold to “authorized customers” in China and would collect a 25% fee.

An Nvidia spokesperson told the BBC that the company welcomed the move and said it would benefit U.S. manufacturing and jobs.

The Commerce Department’s Bureau of Industry and Security said the revised export policy applies to Nvidia’s H200 chips and less advanced processors. Chinese customers will also have to demonstrate “adequate security procedures” and the chips cannot be used for military purposes.

The H200 chip is one generation later than Nvidia’s Blackwell processors, considered the world’s most advanced AI semiconductors, and are still banned in China.

Chinese embassy spokesperson Liu Pengyu told the BBC on Wednesday that the Chinese government has consistently opposed “the politicization and weaponization of technology and trade issues.”

“We oppose China’s inhibitions and restrictions that destroy the stability of industrial and supply chains,” he said. “This approach is not in the mutual interest of both parties.”

Nvidia is caught in a geopolitical tug-of-war between the United States and China, two sides of the global AI race.

President Trump lifted restrictions on chip sales last July, but required Nvidia to pay a portion of its revenue from China to the U.S. government.

The Chinese government has since reportedly ordered its technology companies to boycott Nvidia’s China-bound chips in favor of domestically manufactured chips. The movement is Designed to strengthen China’s technology industryBut experts consistently say the country’s chips still lag behind the United States.

Throughout 2025, Nvidia CEO Jensen Huang will continue to worked in Washington It would allow the company to sell its high-performance chips to China, arguing that global market glut was essential to U.S. competitiveness.

But some U.S. officials have expressed concerns that the chip could benefit the Chinese military and harm progress in U.S. AI development.

Semiconductor analyst Austin Lyons said the Chinese government is likely concerned about domestic companies becoming too dependent on Nvidia, but local companies will be keen to secure H200 chips, at least until domestic alternatives are improved.

Lyons added that NVIDIA would be happy to earn revenue from China, even if it means lower profit margins because the U.S. government takes a cut of the sales.

Mark Einstein of Counterpoint Research said Trump’s “unique” proposal to collect a portion of Nvidia’s sales could set a precedent for his negotiations on other trade tariffs.

“It will be interesting to see if this pricing model expands to other areas.”