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China’s National Development and Reform Commission is urging firms to use energy-efficient data center chips, but it has excluded Nvidia’s H20 processor from its approved list.
Nvidia (NVDA) shares fell more than 5% on Wednesday following a Financial Times report that suggested China’s environmental regulations could impact the chipmaker’s AI sales in the country.
The decline coincided with a broader tech sell-off, fueled by concerns over potential tariff escalations by the Trump administration.
The report cited China’s National Development and Reform Commission (NDRC), which is pushing firms to adopt data center chips that meet strict energy efficiency standards.
Nvidia’s H20 processor – a modified version of its AI chips designed to comply with U.S. export restrictions – is not included in the list of approved chips.
The guidelines exclude Nvidia's H20 chip, a processor compatible with US export controls for the Chinese market.
Anonymous sources told the Financial Times that regulators have privately discouraged major Chinese tech companies, including Alibaba (BABA), ByteDance, and Tencent, from purchasing Nvidia’s H20 chips.
However, the restrictions have not yet been strictly enforced, and sales in China have so far remained unaffected.
If Beijing moves to tighten compliance, it could jeopardize Nvidia’s $17 billion-a-year business in China, a key market for the company.
“Our products provide superb energy efficiency and value in every market we serve. As technology moves rapidly, export control policy should be adjusted to allow U.S. firms to offer the most energy-efficient products possible while still achieving the Administration’s national security goals,” an Nvidia spokesperson said in response to the report.
Separately, The Information reported that Nvidia is in advanced talks to acquire Lepton AI, a startup that provides cloud computing services powered by Nvidia’s AI chips. The deal is reportedly worth several hundred million dollars.
Lepton, founded in 2022, previously provided AI cloud services to game startup Latitude.io and scientific research firm SciSpace. Its co-founders, Yangqing Jia and Junjie Bai, were AI researchers at Meta Platforms.
According to the report, the acquisition would mark a significant step in Nvidia’s push into cloud computing and enterprise software, placing it in direct competition with cloud giants like Amazon (AMZN) and Google (GOOGL).
On Stocktwits, retail sentiment around Nvidia’s stock dipped to ‘neutral’ from ‘bullish’ a day ago.
One user said that if Nvidia’s revenue from China were wiped out, the company would adapt and find a replacement source of revenue.
Another user advised that traders shouldn’t worry about tariffs but the economy’s overall growth.
Nvidia’s stock is down over 16% in 2025 but has remained up 18% over the past 12 months.
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