U.S. President Donald Trump allowed sales in China of the high-performance AI (artificial intelligence) semiconductor "H200" made by Nvidia.
It looks conciliatory on the surface, but it is closer to a thoroughly calculated "business transaction." President Trump set a condition that 25% of the sales proceeds must be paid to the U.S. government. The idea is to collect a so-called security tax to fill the treasury and lock Chinese corporations back into the technology ecosystem of the United States and its allies.
On the 9th (local time), President Trump said on social media, "The U.S. government will allow Nvidia to sell H200 chips to 'approved customers' in China," adding, "In return, the U.S. government will take 25% of the sales." He added that Chinese President Xi Jinping "responded positively" to the proposal.
Nvidia's latest flagship "Blackwell" and the next-generation "Rubin" chips were not mentioned on the export-allowed list. President Trump said, "U.S. customers are already moving to the latest Blackwell chips," emphasizing, "We will allow only the older H200 model in China to maintain America's technological edge."
The Blackwell chips used by U.S. corporations are 1.5 times faster in training and five times faster in inference than the H200. The calculation is to gain practical benefits by selling an out-of-date chip to China at a 25% premium, while U.S. corporations use that money to widen the next-generation technology gap. White House officials predicted the move would give the United States about an 18-month technological edge over China.
China, which actually has to buy the chips, is lukewarm. Chinese regulators are said to be internally reviewing restrictions on purchasing the H200. The Financial Times (FT) quoted a source as saying, "The Chinese government is discussing a plan to require domestic corporations to state reasons why the H200 cannot be replaced by a domestic chip when making purchases." Given past cases, it is effectively a purchase ban.
The United States began restricting exports of Nvidia high-performance chips to China in Oct. 2022. In 2023, it expanded controls to include lower-performance chips. In April, when the Trump administration began a full-fledged trade war with China, it added a measure banning exports, without U.S. government approval, of the H20 chip designed by Nvidia specifically for China.
Afterward, China set its course for technological self-reliance. Led by Huawei, it is accelerating the development of its own AI chips. According to a report by the Institute for Progress (IFP), a U.S. think tank, Huawei's latest AI accelerator Ascend 910C has a total processing performance (TPP) of 12,032, reaching about 76% of Nvidia's H200 (15,840). The H200 still leads, but Huawei's chip is far superior to the H20 (TPP 2,368), a low-spec export model previously sold to China.
The Chinese government is worried that if big tech corporations such as Alibaba and Tencent revert to U.S.-made chips, the semiconductor ecosystem built by domestic corporations like Huawei could wither. Market research firm Counterpoint Research told CNBC, "If China becomes dependent again on Nvidia chips, it is effectively accepting the blade of 'political uncertainty' that could cut supply at any time," adding, "From the Chinese government's perspective, self-sufficiency is the only long-term strategy."
Pushback in the United States is also strong. Democrats immediately unleashed criticism that "security was traded for money." Sen. Elizabeth Warren called the decision "a catastrophic failure economically and for national security."
Security experts warned that China could misuse H200 chips to build up its military. The Center for Security and Emerging Technology (CSET) at Georgetown University said, "The Chinese People's Liberation Army is using advanced chips to develop AI military capabilities," expressing concern that improved access to high-performance chips could hand the edge on the battlefield to China.
Even Nvidia, expected to be the biggest beneficiary, has mixed feelings. Nvidia CEO Jensen Huang said early this month, "We have no idea whether China will allow the purchase of the H200." It is a sign of how great the uncertainty is in the Chinese market.
Nvidia is effectively assuming "zero" revenue from Chinese data centers in its current outlook. Some experts said that considering the expense and time to replace software and hardware, and the risk of possible renewed sanctions, it will not be easy even for Chinese corporations to use Nvidia chips.