BY COMFORT OGBONNA
The United States has decided to permit the export of Nvidia’s H200 processors—its second-most powerful artificial intelligence chips—to China under a new arrangement that includes a 25% fee on such sales. President Donald Trump announced the decision on Monday, describing it as a move intended to protect national security while maintaining America’s strength in the global AI race.
The decision brings clarity to months of debate in Washington over whether U.S. chipmakers should continue selling previous-generation AI chips to China or cut off exports entirely. Although Nvidia and other U.S. chip producers have pushed for continued access to the vast Chinese market, Beijing has recently instructed its companies to reduce reliance on American technology, raising uncertainty about how China will respond to Washington’s new stance.
Nvidia shares climbed 2% in after-hours trading following Trump’s announcement on Truth Social, adding to a 3% gain earlier in the day after a report from Semafor hinted at the development. Trump said he personally informed Chinese President Xi Jinping about the decision, and that Xi reacted “positively.”
According to Trump, the U.S. Commerce Department is finalizing the specific terms of the arrangement. The same framework will also apply to other AI chip producers, including Advanced Micro Devices and Intel. Trump emphasized that the 25% fee—higher than the previously floated 15%—will be collected as an import tax when the chips arrive from Taiwan for U.S. security reviews before being shipped onward to China.
Trump framed the plan as a way to safeguard national security while still supporting American innovation. He highlighted that Nvidia’s U.S. customers are already moving ahead with the company’s cutting-edge Blackwell chips, and soon with the upcoming Rubin series—neither of which will be included in the China export authorization.
The administration views the move as a middle-ground approach: refusing to send Nvidia’s most advanced Blackwell chips to China, but also avoiding a complete shutdown of lower-tier chip exports, which some officials believe could drive Chinese customers entirely toward domestic alternatives, especially those produced by Huawei.
Nvidia praised the policy direction, calling it a balanced approach that maintains U.S. strategic interests. Intel offered no comment, while AMD and the Commerce Department did not respond to requests.
The announcement comes amid renewed anxiety in Washington that allowing advanced AI chips into China could strengthen Beijing’s military modernization efforts. These concerns originally triggered strict export controls under the previous administration, limiting what type of AI semiconductors could legally be sold to China.
Critics, including former senior Commerce Department official Eric Hirschhorn, argued that trading national security for commercial opportunity is a dangerous precedent. Several Democratic senators also condemned the decision, calling it a major economic and national security mistake that could ultimately empower China’s military and industrial capabilities.
A recent report from the Institute for Progress underscored how powerful the H200 chip is—nearly six times more capable than the H20 chips currently allowed for export. While still far behind the new Blackwell series used by U.S. firms, the H200 represents a substantial increase in computational performance that could meaningfully advance China’s AI ambitions.
Republican Representative John Moolenaar warned that China would attempt to copy Nvidia’s technology and eventually undercut the American company, further complicating the long-running technological rivalry.
China has taken a series of steps to accelerate its independence from foreign AI chips. Regulators previously accused Nvidia’s H20 chips of carrying potential security risks—a claim Nvidia denies—and Beijing has advised major tech companies to avoid purchasing Nvidia’s downgraded products designed specifically to meet U.S. export limits.
Despite political tensions, many Chinese tech firms still want the more powerful H200s because they remain superior to any domestically produced alternative. Experts note that while Washington may be willing to approve some chip exports, China must still decide whether it will allow them into the country given growing nationalistic and security-driven concerns.
Meanwhile, China’s domestic semiconductor sector continues to expand. Huawei has released a new multiyear chip roadmap, and smaller players such as Cambricon and Moore Threads are also pushing to gain market share. Even so, analysts say the H200 will likely remain attractive, as Chinese chips are still significantly less powerful.
The shift in policy coincided with the Justice Department’s announcement that officials had dismantled a China-linked smuggling ring that attempted to illegally export at least $160 million worth of controlled Nvidia H100 and H200 chips between late 2024 and early 2025. The timing underscored the high-stakes nature of the global competition for AI hardware.
Some analysts believe Chinese companies will continue buying H200s legally, particularly because the chip is still more advanced than anything available from Chinese manufacturers. While China’s semiconductor indices opened lower on Tuesday in response to the news, they quickly recovered, reflecting both uncertainty and resilience in the market.
The long-term implications of the U.S. decision remain unclear. The policy attempts to walk a delicate line—maintaining America’s competitive advantage in AI while preventing China from leapfrogging in military applications. Whether Beijing will embrace or reject the offer could determine the next chapter in the global AI chip race.
Original article
Comments