US President Donald Trump has approved the sale of Nvidia’s H200 chip to China. This decision reduces the export controls that the U.S. has placed on Chinese technology.
On Monday, Trump told Chinese President Xi Jinping about this decision. Under this plan, 25 percent of the sales revenue will go to the U.S. government. Trump said that sales would only be allowed to “approved customers” and would include measures to protect national security. He stated his administration would take the same approach with other chipmakers like AMD and Intel.
“This policy will support American jobs, strengthen U.S. manufacturing, and benefit American taxpayers,” Trump posted on Truth Social.
Nvidia, based in Santa Clara, California, said the decision strikes a “thoughtful balance” and will help support high-paying jobs and manufacturing in America.
Nvidia shares increased by over 2 percent after hours due to recent news.
Significant Policy Change from the Biden Administration
Former President Donald Trump announced a significant change from the Biden administration’s policy. Biden’s government had limited Nvidia and other chipmakers to selling downgraded versions of their products for the Chinese market.
In a post on Truth Social, Trump criticized Biden’s approach. He said it made U.S. tech companies spend billions on downgraded products that “nobody wanted.”
The H200, released in 2023, is Nvidia’s strongest chip outside of the latest Blackwell series. Trump confirmed that the Blackwell series will still be restricted for the Chinese market.
Although the H200 is not the most advanced chip, it is almost six times more powerful than the previous H20 chip, according to the Institute for Progress, a non-partisan think tank based in Washington.
In August, the Trump administration announced an agreement with Nvidia. Nvidia will pay the US government 15 percent of the money it makes from selling the H20, a product made to meet restrictions on the Chinese market.
Tilly Zhang, a Chinese tech expert at Gavekal Dragonomics, said Trump’s decision shows the realities of the market and strong pressure from Nvidia’s CEO, Jensen Huang.
According to Zhang, the focus is now on competing for market share instead of just blocking China’s tech progress. She mentioned that since blocking China’s technology growth is getting harder, the US is now prioritizing increasing market share and revenue.
Zhang said this change signals a shift in the competition between China and the US in artificial intelligence. She believes that chipmakers in both countries may innovate faster, which could lead to more dynamic markets.
Democratic lawmakers quickly criticized Trump’s announcement.
Trump Administration Harmed US Security – Elizabeth Warren
US Senator Elizabeth Warren from Massachusetts accused the Trump administration of harming US security.
“Trump is allowing Nvidia to export advanced AI chips that his own Department of Justice has said are being illegally smuggled into China,” Warren stated on X. She referred to several investigations by the DOJ into illegal chip shipments.
“His own DOJ called these chips ‘building blocks of AI superiority.’”
Chris McGuire, a senior fellow at the Council on Foreign Relations, said that Trump’s recent decision is a setback for the U.S. in its competition with China to lead in artificial intelligence (AI).
He noted that easing export controls on AI chips will help Chinese AI companies catch up to advanced U.S. AI models. It will also allow Chinese cloud computing firms to set up competitive data centers around the world. McGuire, who worked on tech policy in Biden’s White House, shared these thoughts with Al Jazeera.
He warned that this could undermine the administration’s efforts to keep the U.S. AI technology in a leading position globally.
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