Washington D.C. – Nvidia's efforts to export its H20 artificial intelligence chips to China are reportedly facing significant delays due to a substantial backlog within the U.S. Department of Commerce. As reported by TechCrunch, a key reason for the holdup is a backlog of licensing applications, stemming from internal turmoil, staff shortages, and a breakdown in communication with the industry. This situation is impacting billions of dollars in potential AI chip orders.
The H20 chip is a specialized version of Nvidia's advanced AI processors, designed specifically to comply with U.S. export control regulations aimed at restricting China's access to cutting-edge semiconductor technology. Despite earlier indications, including a green light from U.S. Secretary of Commerce Howard Lutnick in July, the necessary export licenses have yet to be issued. Nvidia had previously stated its expectation for licenses to be granted, hoping to commence deliveries soon.
Sources indicate that the current backlog of license applications at the Commerce Department is the longest in over three decades, according to Reuters. This administrative bottleneck is occurring despite the H20 being a less powerful variant than Nvidia's top-tier chips, engineered to meet export limitations. The lack of clarity on policy and the timeline for clearing the backlog are causing concern among chipmakers and industry observers.
The delay carries substantial financial implications for Nvidia. The company previously disclosed that licensing requirements for the H20 had led to a $4.5 billion charge in the first quarter of fiscal year 2026 and anticipated an $8 billion hit to its revenue in the second quarter. While Nvidia has declined official comment on the current licensing delays, it has been exploring strategies to maintain its presence in the crucial Chinese AI market.
The ongoing situation highlights the complex interplay of technology, regulation, and geopolitics in the AI era. National security experts have expressed concerns regarding the export of H20 chips, with some urging the administration to reconsider its stance. The resolution of this backlog will serve as a critical test for the U.S. government's ability to navigate these intricate challenges while balancing economic interests with national security objectives.