Trump’s pivot on Nvidia chips gives China a leg up over the U.S. in the AI race

BEIJING — U.S. President Donald Trump’s move to allow Nvidia to ship a more advanced artificial intelligence chip to China will significantly boost Beijing’s technology capabilities, analysts say.

This marks a shift in policy, as the United States has stepped up restrictions on China’s access to advanced semiconductors over the past few years. But the restrictions haven’t stopped Chinese companies like DeepSeek from finding ways to build AI models to rival their U.S. counterparts; mostly with lower operating costs.

“Computers are our main advantage,” Rush Doshi, an assistant professor at Georgetown University, said on social media platform X, noting that China already has an advantage over the United States in electrical energy, engineers and other fields.

“By giving up on this increase the odds “The world is running on Chinese AI,” said Doshi, who is senior deputy director for China and Taiwan affairs at the National Security Council under the Biden administration.

Trump’s He said in a post on Monday: Its Real Social platform He said Nvidia could ship a more advanced chip, called the H200, to “approved customers in China” and other countries, as long as the U.S. gets a 25% cut. This is higher than the 15% rate agreed in the summer.

He noted that Nvidia’s more advanced Blackwell and Rubin chips are not part of the China deal.

“The Biden administration forced our Big Businesses to spend BILLIONS of DOLLARS building “broken” products that no one wanted, a terrible idea that slowed innovation and hurt the American Worker,” Trump said. he said.

Nvidia had created a less powerful chip called the H20 to comply with US rules but was forced to stop shipping it to China in April.

“This move provides many advantages to China” Advanced AI computing that it wouldn’t otherwise have“said Tim Fist, director of emerging technologies at the Institute for Progress, a Washington, D.C.-based think tank.

“The new Chinese stack will be NVIDIA chips, Tencent/Baidu/Alibaba cloud, and DeepSeek/Qwen/Kimi models,” Fist said in a social media post on X, noting that these AI capabilities will then compete with U.S. rivals abroad.

think tank on sunday published a report That said, if Nvidia is allowed to export its H200 chips, the U.S. advantage over China in AI computing next year will drop from about 10x to 5x at most.

George Chen, digital practice partner and co-chairman of The Asia Group, said the H200 could help many Chinese AI developers improve their models, making the chip “much more useful and effective” than the H20.

He noted that Trump’s decision is a sign of improving Washington-Beijing relations, as the US leader plans to visit China in April. “There’s a good window of time to sell the H200, but it won’t last forever,” Nvidia said.

Faced with US restrictions, China has sought to reduce its dependence on foreign technology. country’s upcoming The 5-year plan, which starts next year, underlined that policies and government funds will increasingly be directed to domestic chips and artificial intelligence applications.

“China will continue to do everything it can to reduce its dependence on US AI chips. While maintaining access to US chipsChris McGuire, a senior fellow on China and emerging technologies at the Council on Foreign Relations, said about X. He noted that this would still take time, as China doesn’t plan to make a better chip than Nvidia’s H200 until at least the fourth quarter of 2027.

McGuire said Trump’s decision “nullifies the United States’ greatest advantage over China in artificial intelligence” and called the move “a breakthrough.” Major change in US policyand a major strategic mistake.”

The White House Office of Science and Technology Policy did not immediately respond to CNBC’s request for comment.

Nvidia CEO Jensen Huang has spoken publicly about China’s development of AI capabilities and called on the United States to allow the company to sell its products to the country.

So far, US restrictions have not completely kept China away from advanced ships.

Separately, the U.S. Department of Justice said in a statement on Monday that More than $50 million in advanced graphics processing units seized It is designed for China and other restricted areas. The statement said that between October 2024 and May 2025, individuals were arrested and others “exported and attempted to export” Nvidia H100 and H200 chips worth at least $160 million.

Nvidia shares rose 2 percent in the hours after Trump’s post. Chinese AI chip Moore Threads rose more than 2% in the mainland market and Cambricon rose more than 1%, while SMIC shares fell more than 2% in Hong Kong trading.