China has figured out the U.S. strategy for allowing it to buy Nvidia Corp.’s H200 and is rejecting the AI chip in favor of domestically developed semiconductors, White House AI czar David Sacks said, citing news reports.

President Donald Trump said on Dec. 8 he would allow shipments of Nvidia’s H200 to China, part of an administration effort backed by Sacks to challenge Chinese tech champions like Huawei Technologies Co. by bringing American competition to their home market. On Dec. 12, Sacks signaled that he was uncertain about whether that approach would work.

“They’re rejecting our chips,” Sacks said in an interview on Bloomberg Tech, citing an unspecified news article he had seen that day. “Apparently they don’t want them, and I think the reason for that is they want semiconductor independence.”

Sacks’ comments raise questions about whether Nvidia will be able to recover revenue from China, a data center market it has removed entirely from its forecasts but that CEO Jensen Huang has put at $50 billion this year. Bloomberg Intelligence analysts estimate annual H200 revenue in China to be a $10 billion opportunity — but only if the nation accepts the U.S. firm’s chips.

In a statement from a spokesperson, Nvidia said it continues to work with the administration on H200 licenses for vetted customers. “While we do not yet have results to report, it’s clear that three years of overbroad export controls fueled America’s foreign competitors and cost U.S. taxpayers billions of dollars,” the company said.

China is weighing a package of incentives worth as much as $70 billion to support its local chipmaking industry, Bloomberg reported Dec. 12, underscoring Beijing’s resolve to reduce its reliance on foreign chipmakers such as Nvidia. It suggests the government will continue to support companies like Huawei and Cambricon Technologies Corp. even with the H200 cleared by the U.S. for export to China.

The H200, which was introduced in 2023 and began shipping to customers last year, is part of the Hopper generation of Nvidia’s chips, second-best to the Blackwell line and two generations behind the upcoming Rubin series. An 18-month lag behind the latest Nvidia chips was part of the Trump administration’s justification for the decision.

Sacks, a venture capitalist who joined the administration in January, identified China’s desire to prop up and subsidize Huawei as a key reason for its H200 reluctance. Even so, he defended the decision to allow China to access H200 chips, which he called a “lagging” technology and no longer state-of-the-art.