[HONG KONG] US officials are having early discussions on whether to let Nvidia sell its H200 artificial intelligence (AI) chips to China, according to people familiar with the matter, a contentious potential move that would mark a major win for the world’s most valuable company.
US President Donald Trump’s team has held internal talks about H200 chip shipments to the Asian country in recent days, said the people, who requested anonymity to discuss a highly sensitive matter. No final decision has been made, the people emphasised, and it’s entirely possible that the idea remains an internal debate and never results in actual licence approvals, which are required under export controls that Washington first imposed in 2022.
Still, the fact that H200 shipments are being considered is a major departure from the Trump administration’s earlier public stances on semiconductor export controls. It would represent a concession to Beijing that would almost certainly draw widespread opposition from China hawks in Washington. It would also constitute a victory for Nvidia chief executive officer Jensen Huang, who’s lobbied Trump’s team intensively for a reprieve from export controls that many within the administration consider crucial to US national security.
Nvidia shares climbed to a session high on the news Friday (Nov 21). They gained as much as 2 per cent to US$184.29 following earlier declines.
Nvidia said in a statement that the current regulatory landscape doesn’t allow it to offer a competitive data centre product in China, “leaving that massive market to our rapidly growing foreign competitors”. Nvidia’s hardware is the industrial standard for AI development, making its chips the most coveted components for companies building facilities used to train and run AI models.
“Our foreclosure from the China data center compute market has no impact on our ability to supply customers in the USA,” the Santa Clara, California-based company added.
Nvidia has repeatedly emphasised that point this year, as it lobbies against legislation that would force the chipmaker to prioritise Americans over Chinese customers. The White House is urging lawmakers to reject that bill, which is in many ways a bipartisan attempt to safeguard against Trump green-lighting cutting-edge chip sales to the Asian country.
Representatives from the White House and the Commerce Department, which regulates exports, didn’t immediately respond to requests for comment about the H200 discussions.
If realised, the H200 move would constitute a significant easing of US trade restrictions designed to curtail China’s prowess in AI. The H200 is more powerful than the H20 processor, a chip designed specifically for the China market that is the most advanced model Washington currently approves for export. But both so-called AI accelerators are based on the previous-generation Hopper technology – rather than the current Blackwell line that Nvidia sells in the US.
Trump had earlier floated the possibility of discussing Blackwell chip exports with Chinese leader Xi Jinping. The topic ultimately didn’t come up during recent talks, but his administration didn’t take exports of currently restricted AI chips completely off the table. Treasury Secretary Scott Bessent later said he could imagine exporting Blackwell chips to China once they are no longer the most advanced – possibly in a year or two.
In the weeks since the Trump-Xi meeting, administration officials have continued to hold quiet discussions on what chips the US could be comfortable selling – that China could also approve of its companies using – according to people with knowledge of the talks.
Beijing has repeatedly protested Washington’s curbs on both advanced chips and the tools used to make them, and major Chinese companies still broadly prefer Nvidia chips to inferior domestic alternatives. At the same time, though, the Chinese government wants the country to transition to homegrown AI hardware from companies like Huawei Technologies, which is working hard to catch up. Beijing has discouraged or outright forbidden firms from using the H20 chip and another China-focused Nvidia product.
Selling the H200 to China is seen by some in the Trump administration as a compromise, people familiar with the matter said. Shipments of the processor would be a less extreme move than offering Blackwell chips, something that’s widely opposed by senior staff.
Still, there are some proponents of giving China access to more up-to-date processors, one of the people said, framing the debate as being a choice between the Blackwell and Hopper families of products. Many don’t want to see any additional Nvidia chips go to China at all, a view that’s shared by lawmakers on both sides of the aisle.
Just five months ago, Bessent told lawmakers that the Trump administration had “no intent” to increase China’s access to advanced semiconductors. He noted then that Trump’s team had even curbed access to the less-powerful H20 chips – an action considered but not taken by former US President Joe Biden’s administration.
Weeks later, the US approved shipments of H20 chips to China – in exchange for a 15 per cent cut of the revenue, a legally dubious arrangement that hasn’t been formalised. The H20 export controls remain in place, meaning that sales of those chips to the Asian country still require US government permission.
Several senior officials said publicly at the time that the move was part of a trade deal to secure access to rare-earth minerals from China. But roughly a half-dozen people with knowledge of the terms of the accord struck in London said that there was no such agreement. China’s commerce ministry, for its part, said it had approved rare-earth licences in accordance with the US lifting other recent export controls. It separately acknowledged Washington’s decision on H20 chips, which it described as proactive.
Commerce Secretary Howard Lutnick justified exporting those accelerators on the grounds that they would get China “addicted” to American technology – hurting the Asian country’s competitiveness without selling China “our best stuff, not our second-best stuff, not even our third-best”. Beijing responded by encouraging companies not to buy those Nvidia chips, strengthening a position the Chinese government had held for at least a year.
But then in August, Trump floated the possibility of selling a less-advanced version of Nvidia’s top-of-the-line Blackwell family of products – a prospect that alarmed China hawks in and outside of the administration and helped propel export control legislation on Capitol Hill.
When Trump ultimately didn’t discuss Blackwell chip sales with Xi last month, many in Washington breathed a sigh of relief. But they’re also wary that things could change.
A bipartisan group of senators is currently drafting legislation that would force the Commerce Department to deny licence applications for all currently restricted chip exports to China, Bloomberg has reported. If that were to become law, it would render the Trump team’s H200 discussion a moot point. BLOOMBERG
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