The Foundation for Defense of Democracies says the Trump administration is making a costly strategic mistake by allowing China to purchase advanced AI chips from NVIDIA.
“The Trump administration is giving China a much-needed boost in the race for artificial intelligence (AI). After a White House meeting between President Donald Trump and NVIDIA CEO Jensen Huang, the company announced … that it would resume sales of its H20 AI chips in China following an April ban,” FDD’s Jack Burnham writes in a July 16 analysis.
“While NVIDIA produces certain higher-end chips for the domestic market, giving China access to the H20 will allow it to rapidly integrate AI into its military while it continues to pursue self-sufficiency,” Burnham says.
NVIDIA founder and CEO Jensen Huang on July 14 announced approval from the Trump administration to sell China advanced H20 chips used in artificial intelligence. The Bureau of Industry and Security has yet to officially announce the policy switch after imposing restrictions on H20 exports to China in April.
“While NVIDIA will still be required -- on paper -- to obtain export licenses from the Commerce Department to sell its H20 line to Chinese customers, the Trump administration has said they will be granted automatically,” says the FDD analysis.
“Though not quite as powerful as NVIDIA’s newer chips, the H20 remains essential for AI deployment due to its memory capabilities that outclass the firm’s previously export-compliant H100 line,” Burnham says. “NVIDIA also reported that it would be introducing a new chip based on its leading Blackwell design specifically for the Chinese market and geared toward integrating AI into the industrial manufacturing sector.”
The security group notes that semiconductor maker Advanced Micro Devices also announced “plans to resume sales of its leading AI chips in China, which were also blocked in April. As with NVIDIA, AMD’s chips have become essential inputs for training advanced AI models,” Burnham says.
“It is a mistake to allow NVIDIA to resume the sale of H20 chips in China. It will offer short-term aid to the most promising aspect of Beijing’s technology sector while giving Chinese firms time to reduce their dependence on imports. The push for domestic chip development has only gained momentum over the past several years,” Burnham writes.
“Rather than give China relief from export restrictions, Washington should tighten its control on the flow of advanced semiconductors. The Commerce Department should increase enforcement efforts while maintaining restrictions on the sale of semiconductor design software and manufacturing equipment. This should be paired with Congressional action on screening outbound investment to prevent American capital from fueling China’s technology sector,” the FDD posting argues.
On the other side, Center for Data Innovation director Daniel Castro said in a statement, “The decision to allow Nvidia to resume sales of its H20 chip to China is a welcome course correction. Nvidia designed this chip specifically to comply with U.S. export controls. Blocking its sale despite that compliance sent the wrong signal to both U.S. companies and global markets.”