Nvidia H20 GPUs reportedly caught up in U.S. Commerce Department's worst export license backlog in 30 years — billions of dollars worth of GPUs and other products in limbo due to staffing cuts, communication issues

In the latest blow to Nvidia's attempts to sell its H20 GPUs to Chinese firms, the US Commerce Department stands accused of delaying the approval of key export licenses that are required before shipments can start. According to officials contacted by Reuters, this is the worst backlog of license applications in over three decades, leaving billions of dollars worth of GPUs and other products in limbo.

A key component of the second Trump administration, since its inception, has been instability in global trade. On-again, off-again tariffs and soured trade relations between long-time allies have been all too common, but few trading relationships have been as tumultuous as that between the U.S. and China. Terse negotiations have been ongoing for months, and at the heart of it all lies Chinese access to AI training and inference hardware, namely, Nvidia GPUs.

Despite attempts to limit China's access to the best GPUs with consumer cards like the 5090D (and double D) and the cut-down H200, known as the H20, America and its companies still want to sell to China. While in public, the administration talked a big game, it has reportedly been quietly preventing harsh actions against China from the security bureau of the Commerce Department (BIS) for months, and released restrictions on exports last month.

Looming delays

Delays in the Commerce Department approving export licenses are now stalling the shipment of hundreds of thousands of GPUs that China is trying to purchase, alongside semiconductor manufacturing equipment and other products.

“We’re seeing whole sectors where there is no movement or indication if or when licenses will be issued," said Sean Stein, president of the U.S.-China Business Council.

Part of this may be micromanagement within the Commerce Department. Staff are allegedly critical of BIS undersecretary Jeffrey Kessler, who started at the department in March. He has allegedly urged staff to limit their direct communication with companies and industry officials, and demanded that all meetings be entered into a central spreadsheet. He has also been difficult to pin down for his own meetings, according to Reuters sources.

This is compounded by continued vacancies of important positions within the Commerce department, including the China-based export control offices. This comes after the push for retirement of experienced officials as part of the DOGE program and the Trump administration's attitude towards government spending and staffing. This leaves the remaining staff unable to complete certain tasks or to give more concrete timelines on when outstanding issues will be rectified.

This comes alongside the Commerce Department outlining major regulatory changes, too. It announced in May that it would rescind export controls put in place by the previous Biden administration, which targeted subsidiaries of companies already banned from exporting to China. But that hasn't happened yet, leaving potentially affected companies stuck and unsure of how to proceed.

All of this adds up to a major issue with even just finding out any kind of timeline for license approval. In 2023, the BIS reportedly took just 38 days to respond to license applications, but it's extending far beyond that in 2025.

This could cause long-term impacts

This isn't just a short-term issue, either. It's one that risks bleeding into the medium and long-term. Chinese companies will only wait so long for orders before looking elsewhere. Stein claims that they are already starting to do deals with other suppliers in China and other countries. The U.S. risks losing those deals permanently if the companies find more reliable partners elsewhere.

That could extend to other territories around the world, too. Reuters quotes the president of a Florida-based trade consultancy as having seen delays in license approvals for radar and sonar systems to Latin American countries, as well as sporadic export application denials for shipping expensive manufacturing equipment.

For affected companies, there's little they can seemingly do to speed things along and encourage the approval of their export licenses. If Nvidia, the most valuable company in the world, can't get its licenses approved on time, what hope does anyone else have?

The situation raises further uncertainty for traders and trade officials alike. Especially since China is now concerned that GPUs could have built-in trackers to thwart resale or unauthorized exports.

All of this not only risks long-term U.S. business interests, but ongoing trade talks, too. The Trump administration recently lifted restrictions on shipping GPUs and other technology to China as a fig leaf in tariff discussions. If it turns out that the licenses aren't approved, and shipments can't be made, that may upset Chinese counterparts and see the value of such trades diminish as China looks elsewhere for its source of high-end AI technology and hardware.

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