Nvidia CEO Jensen Huang spent 2026 running two negotiations at once, one with a Washington that wanted a cut of every China sale, the other with Gulf sovereign-wealth vehicles racing to build gigawatt-scale AI campuses before their neighbors did. Both talks moved fast. Beijing's own bureaucracy discouraged buyers from the chips Washington had just cleared for sale, and the resulting vacuum sent tens of thousands of GPUs toward Riyadh and Abu Dhabi instead of Shenzhen 134.
A Rule Rescinded, a Revenue Share Invented
The Trump administration rescinded the Biden-era AI diffusion rule in May 2025, tearing up a tiered licensing system that had sorted the entire world into three buckets of chip access. A negotiated substitute followed that August: Nvidia and rival AMD agreed to hand the U.S. government 15% of revenue from specified China sales as the price of an export license, with Nvidia's share attached specifically to its China-tuned H20 chip 1. The arrangement inverted the usual logic of export control, converting a restriction into a toll booth Washington could collect from every transaction that cleared it.
Revenue-sharing solved one problem and created another. Chinese buyers, watching a foreign government skim a fixed percentage off every purchase, gained a fresh incentive to look elsewhere, and Beijing's own regulators supplied the nudge those buyers needed.
China Retreats From the Table
H20 production reportedly stalled in August 2025 amid Chinese government directives discouraging domestic purchases of the chip, and September brought fresh restrictions targeting Nvidia's RTX Pro 6000D line as well 1. Two license approvals inside one summer, followed by two purchase discouragements from the buying side, left Nvidia holding regulatory permission it increasingly lacked customers willing to use.
Nvidia's own numbers confirm the standoff persisted into late 2026. The company's fiscal second-quarter results, covering the period ended July 26, 2026, logged total revenue of $96.2 billion, up 106% year over year, with Data Center revenue climbing 117% to $89.0 billion 2. Buried in the reconciliation tables sat the H20 story in miniature: a $4.5 billion inventory charge in the year-ago quarter, a charge that vanished the following quarter, then a $180 million partial release this quarter, evidence of chips written off and only fractionally recovered 2. Guidance for the next quarter excluded China Data Center compute revenue entirely, a forward projection built on the assumption that Beijing's market stays effectively closed regardless of what license Washington grants 2.
The Gulf Fills the Gap
Saudi Arabia moved first and moved fast. The kingdom's Public Investment Fund established Humain in May 2025 under founder Mohammed bin Salman, and the company named Tareq Amin CEO the same month 4. Nvidia announced it would ship 18,000 AI chips to Saudi Arabia through the new venture, a commitment Humain paired with additional partnerships secured that year with AMD and Qualcomm 4. Beyond hardware, Humain built ALLaM, an Arabic-first multimodal language model trained on more than 500 billion Arabic tokens, and the company has stated ambitions to stand up several gigawatts of data-center capacity 4.
The UAE answered with scale of its own. G42, led by founder and Group CEO Peng Xiao and chaired by Tahnoun bin Zayed Al Nahyan, announced Stargate UAE on May 22, 2025, a joint infrastructure push with OpenAI, Oracle, SoftBank Group, Cisco, and Nvidia aimed at Abu Dhabi compute campuses targeting 2026 operations 3. Washington authorized the underlying hardware that November, clearing export of semiconductors equivalent to roughly 35,000 Nvidia Blackwell chips for G42's use 3. The UAE's own export classification shifted further in July 2026, when Commerce reclassified the country into Country Group A:5 and named G42 an authorized receiving entity, easing restrictions that had constrained earlier shipments 3.
Boardrooms as Backchannels
Corporate governance did quiet diplomatic work alongside formal licensing. G42's board includes Microsoft President Brad Smith, a seat that gives one of Washington's most seasoned technology-policy hands a direct line into Abu Dhabi's AI buildout and, by extension, into the compliance questions any Gulf chip shipment eventually raises 3. Mubadala CEO Khaldoon Khalifa Al Mubarak and Silver Lake co-CEO Egon Durban round out a board blending sovereign capital, hyperscaler diplomacy, and private equity, a combination built to survive scrutiny from regulators on three continents simultaneously.
Read as strategy, the board composition functions as insurance. A Gulf AI venture stocked with a Microsoft executive, a major American private-equity partner, and Emirati sovereign leadership carries reputational and political cover a purely regional buyer would lack, cover that likely eased Commerce's November 2025 authorization and the further easing that followed in July 2026.
A Record Quarter Meets Its Ceiling
Huang's company posted the largest quarterly revenue figure in its history during the same stretch China stayed functionally shut. That combination carries its own lesson: the AI buildout scaled past the point where any single national market, however large, determines the trajectory. Saudi and Emirati orders alone, measured in tens of thousands of chips, now substitute meaningfully for a China channel choked by mutual distrust on both sides of the transaction.
Whether that substitution proves durable depends on variables outside Nvidia's control entirely — a shift in Beijing's domestic-chip strategy, a change in Gulf capital allocation, or a fresh Washington administration revisiting the 15% arrangement its predecessor invented. Huang, for his part, kept building toward whichever market stayed open longest, treating geography as a hedge rather than a strategy.
By the numbers
- Fifteen percent of certain China chip revenue: the cut Nvidia and AMD agreed to pay the U.S. government for export licenses, August 2025 1.
- Total revenue hit $96.2 billion in the quarter ended July 26, 2026, up 106% year over year 2.
- Data Center revenue reached $89.0 billion that same quarter, up 117% year over year 2.
- Roughly 35,000 Blackwell-equivalent chips gained export authorization to G42 in November 2025 3.
- Eighteen thousand AI chips make up Nvidia's committed shipment volume to Saudi Arabia's Humain, announced May 2025 4.
- A $4.5 billion H20 inventory charge from a year earlier saw partial reversal via a $180 million release this quarter 2.
What to watch
Nvidia's next earnings call will show whether China Data Center revenue stays excluded from guidance a second consecutive quarter, the clearest read available on whether Beijing's pullback persists or eases. G42's Country Group A:5 reclassification, effective July 2026, deserves a follow-up check on actual chip deliveries against the 35,000-unit authorization, since a license and a shipment remain distinct events. Humain's stated gigawatt ambitions offer a concrete milestone worth tracking through 2027: the gap between announced capacity and operational capacity tends to widen fastest in exactly this kind of sovereign-scale buildout. Watch, too, whether other Gulf or Southeast Asian buyers negotiate board seats for Western executives the way G42 secured Brad Smith, a template other capital-rich, compliance-conscious buyers may copy directly.
Sources
- Wikipedia contributors, "Nvidia," Wikipedia, retrieved Sept. 4, 2026, https://en.wikipedia.org/wiki/Nvidia
- Nvidia Corporation, "NVIDIA Announces Financial Results for Second Quarter Fiscal 2027," Nvidia Newsroom, Aug. 27, 2026, https://nvidianews.nvidia.com/news/nvidia-announces-financial-results-for-second-quarter-fiscal-2027
- Wikipedia contributors, "G42 (company)," Wikipedia, retrieved Sept. 4, 2026, https://en.wikipedia.org/wiki/G42_(company)
- Wikipedia contributors, "Humain," Wikipedia, retrieved Sept. 4, 2026, https://en.wikipedia.org/wiki/Humain