Key Takeaways
- Nvidia (NVDA) has yet to record any sales of its H200 AI chips to China despite a recent policy shift by the U.S. government intended to allow restricted exports.
- A U.S. District Judge dismissed xAI’s trade secrets lawsuit against OpenAI, ruling that the company failed to plausibly allege that OpenAI directed the theft of confidential source code.
- Strict export conditions, including a 50% volume cap and a 25% revenue-sharing tariff, continue to hamper the flow of advanced semiconductors to the Chinese market.
- The court granted xAI leave to amend its complaint, allowing Elon Musk’s AI startup a second chance to prove its claims of "predatory hiring" and intellectual property misappropriation.
- Inter-agency security reviews involving the Departments of State, Defense, and Energy remain the primary bottleneck for chip export license approvals.
Nvidia H200 Exports to China Remain at a Standstill
A senior U.S. Commerce Department official confirmed on Tuesday that no Nvidia (NVDA) H200 chips have been sold to China to date. This statement comes nearly two months after the Trump administration revised export controls in mid-January 2026 to permit the sale of advanced AI processors under highly regulated conditions. The delay is attributed to an intensive national security review process that requires case-by-case approval from multiple federal agencies.
The new regulatory framework, codified by the Bureau of Industry and Security (BIS), moved the licensing policy from a "presumption of denial" to a "case-by-case review." However, the "green light" for Nvidia (NVDA) and AMD (AMD) came with significant strings attached, including a requirement that China-bound volumes remain at or below 50% of the company’s domestic U.S. sales. Additionally, a 25% revenue-sharing tariff was imposed on these sales to support the American semiconductor industry.
Market uncertainty has been further exacerbated by reports that Chinese customs officials initially blocked shipments of the newly approved processors. While Nvidia (NVDA) reportedly expected over one million orders from Chinese clients, suppliers have been forced to pause production as inter-agency discussions continue. The U.S. State Department is reportedly seeking additional safeguards to ensure the chips are not repurposed for military use or used in data centers that compete with U.S. cloud providers.
Court Dismisses xAI Trade Secrets Suit Against OpenAI
In a separate legal development, U.S. District Judge Rita Lin dismissed a lawsuit filed by Elon Musk’s xAI against OpenAI, the creator of ChatGPT. The suit, filed in September 2025, accused OpenAI—which is heavily backed by Microsoft (MSFT)—of stealing trade secrets by poaching key engineers and executives. xAI alleged that former employees brought proprietary source code for its Grok chatbot to the rival firm.
Judge Lin ruled that xAI failed to provide "plausible evidence" that OpenAI committed misconduct or specifically directed employees to misappropriate intellectual property. The judge noted that the current complaint failed to establish a direct link between the hiring of former xAI staff and the actual use of stolen secrets at OpenAI. Despite the dismissal, the court allowed xAI the opportunity to refile an amended complaint to address these evidentiary gaps.
OpenAI has consistently maintained that the litigation is part of a broader campaign by Musk to "harass a competitor" with unfounded legal claims. This case is one of several high-stakes legal battles between Musk and OpenAI CEO Sam Altman, including a separate suit regarding OpenAI’s transition to a for-profit model. That related case, where Musk is seeking up to $134.5 billion in damages, is currently scheduled for trial in late April 2026.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.