Nvidia’s relationship with China has become even more complicated as a report says Jensen Huang was the target of a espionage plot.

Huang scored a victory for his company in December 2025 when he won approval from the Trump administration for Nvidia to export H200 chips to Chinese buyers, a policy change that came amid $5 million in lobbying by Nvidia throughout the year. Even chip models like the H200, which are now several generations behind Nvidia’s flagship products, remain competitive for Chinese buyers thanks to options available from companies like Huawei Technologies.

Still, sales of the H200 represented less than 1% of Nvidia’s $89 billion in data center revenue for the second quarter, Nvidia said. Some of this sales weakness also comes from Beijing, which recently moved to block Chinese buyers from purchasing Nvidia chips as Xi Jinping’s government seeks to reduce its reliance on American technology, turning instead to local alternatives like Huawei.

Given “continuing geopolitical uncertainty,” Colette Kress, Nvidia’s chief financial officer, told analysts, “there is no China data center compute revenue in our outlook.”

While it’s unclear how many H200 chips Nvidia sold to Chinese buyers in the second quarter, those sales fell below the U.S.-approved maximum due to blockades imposed by the Chinese government, the company said.

“In the current geopolitical and regulatory environment, we are unable to create and deliver a competitive product for broad distribution in the Chinese data center market, with the approval of the U.S. government and the Chinese government,” Nvidia said in its second-quarter earnings report.

Smuggling problems

The restrictions haven’t stopped Chinese buyers from looking for workarounds to get some of the world’s best chips.

Since the U.S. government imposed its sales restrictions on Nvidia, a parallel market has arisen in response, according to public reports and investigations by the Justice Department. Buyers and sellers in unrestricted Southeast Asian countries import chips under legitimate guises, then change labels, change packaging or use other methods to disguise the true contents of the package before sending the chips to China, news reports and the U.S. government have claimed.

In China, users of Douyin, the domestic version of TikTok, are openly peddling sanctioned chips such as Nvidia’s Blackwell B300, priced at several million US dollars per server, in videos reviewed by Yahoo Finance. Such sales would likely violate Commerce Department restrictions.

Megaspeed, the Singapore-based company that employed Alice Huang, has been under investigation by U.S. authorities for more than a year over concerns that the company was shipping Nvidia’s most advanced chips to data centers across Southeast Asia that serve Chinese companies or was shipping the physical chips directly to China through middlemen, according to the New York Times.

Nvidia has repeatedly said there is no evidence its chips are being smuggled into China, and the company told the New York Times that if anyone close to the company poses a “threat to U.S. industry,” Nvidia is confident the U.S. government would notify the company. The company added that while Huang often speaks with clients, those conversations never include “information relevant to national security.”

Still, for Huang and Nvidia, the headlines are a reminder of the geopolitical tensions inherent in the AI ​​business.

While it is in Nvidia’s interest to serve as broad a customer base as possible, national security concerns in Washington continue to interfere with the company’s ability to sell in the world’s second-largest economy, where buyers have proven willing to pay premium prices for its products.

Correction: A previous version of this story misstated where Huang answered a call from Trump on stage. It was at the All-In Summit.

Follow Jake Conley on X @byjakeconley or email him at jake.conley@yahooinc.com.