US President Donald Trump has approved Nvidia to sell its advanced H200 artificial intelligence (AI) chips to “approved customers” in China, on the condition that the US takes a 25% cut of the sales, up from the 15% previously agreed. Analysts, however, warned that the move could significantly boost China’s tech capabilities and narrow the AI gap between both countries.
The US President announced the decision on his Truth Social platform on Monday, specifying that Nvidia’s newer Blackwell and Rubin chips are not included in the deal, CNBC reported.
Nvidia had created the less powerful H20 chips to meet US regulations but was forced to halt shipments to China after restrictions in April. In a regulatory filing on April 15, the chipmaker said it was bracing for an estimated US$5.5 billion (S$7.23 billion) financial hit related to H20 inventory, purchase commitments, and other reserves, after being informed by the US government that the H20 would now require a licence for exports to China for the “indefinite future.”
US President Trump criticised the Biden administration, saying it forced America’s “great companies” to spend billions of dollars building “degraded” products that nobody wanted, calling it “a terrible idea that slowed innovation, and hurt the American Worker.”
However, analysts warned that the US President’s move could further narrow the AI gap between the two countries.
Rush Doshi, assistant professor at Georgetown University, said on X that the US’ “main advantage” is compute, adding that giving this up “increases the odds the world runs on Chinese AI.”
Tim Fist, director of the Washington-based think tank Institute for Progress, said something similar, noting that the H200 will give Chinese developers “a bunch of advanced AI compute they wouldn’t otherwise have,” enabling them to build a stack combining Nvidia chips, local cloud providers like Tencent, Baidu, and Alibaba, and Chinese AI models such as DeepSeek, Qwen, and Kimi to compete with US counterparts.
A Sunday report from the think tank said the US advantage over China in AI compute could fall from roughly 10 times to around five times next year if H200 exports proceed.
George Chen, partner and co-chair of digital practice at The Asia Group, said that the move signals improved US-China relations ahead of Mr Trump’s planned visit to Beijing in April next year. However, he warned that while the chipmaker has a “good time window” to sell the H200 chips, “it won’t be…forever.”
Chris McGuire, a senior fellow for China and emerging technologies at the Council on Foreign Relations, also said on X that “China will continue to do everything in its power to reduce its dependency on US AI chips, even while it retains access to US chips.”
He added that the US President’s decision negates the US’ biggest advantage over China in the AI competition, calling his decision a “significant strategic mistake.” /TISG
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