Trump Allows Sale Of Powerful Nvidia Chip Shipments To China Despite Security Concerns

WASHINGTON, Dec 8 (Reuters) – The U.S. government will allow Nvidia to export its H200 artificial intelligence chips to China and charge a fee for each chip, U.S. President Donald Trump said on Monday. Nvidia shares rose 1.2% in after-hours trading after Trump made the announcement on Truth Social and closed 3.16% higher after Semaphore first reported the possibility of approval.

Trump said he informed Chinese President Xi Jinping, whose Nvidia chips are under government review, about the move and he “responded positively,” according to Trump’s post. Trump said the US Department of Commerce was finalizing details of the regulation and that the same approach would apply to other AI chip companies such as Advanced Micro Devices and Intel.

“We will protect National Security, create American jobs, and maintain America’s leadership in artificial intelligence,” Trump wrote on Truth Social. “NVIDIA’s US Customers are already moving forward with incredible, highly advanced Blackwell chips, and soon Rubin will no longer be part of that deal.” Authorizing the shipments could signal a friendlier approach to China after Trump and Xi agreed to a truce in the two countries’ trade and technology war in Busan, South Korea, in late October.

Administration officials view the move as a compromise between sending Nvidia’s newest Blackwell chips to China, which Trump has not authorized, and not sending any U.S. chips to China, a person familiar with the matter said. Officials believe this will support Huawei’s efforts to sell AI chips in China. Nvidia and the U.S. Department of Commerce did not immediately respond to requests for comment.

China hawks in Washington worry that selling more advanced AI chips to China could help Beijing strengthen its military; These fears initially led to restrictions on such exports by the Biden administration. The Trump administration is considering greenlighting the sale, sources told Reuters last month.

Previous media reports of H200 export approvals had drawn harsh criticism from Sen. Elizabeth Warren, a Massachusetts Democrat who has supported a bipartisan effort to reserve powerful U.S. AI chips for U.S. firms. “Following his backroom meeting with Donald Trump and his company’s donation to the Trump ballroom, (Nvidia) CEO Jensen Huang followed through on his wish to sell to China the most powerful AI chip we’ve ever sold,” Warren said in a statement. “This risks furthering China’s drive for technological and military dominance and undermining the economic and national security of the United States.”

The H200 chip, introduced two years ago, has higher bandwidth memory than its predecessor, the H100, allowing it to process data faster.

H200 will be nearly six times more powerful than H20, the most advanced AI semiconductor that can be legally exported to China, after the Trump administration lifted its brief ban on such sales this year, according to a report released Sunday by the nonpartisan think tank Institute for Progress.

The report also stated that exporting the chip would allow Chinese AI laboratories to create AI supercomputers with performance similar to leading US AI supercomputers, albeit at higher costs.

Faced with Beijing’s strong use of export controls on rare earth minerals critical to producing a range of technology products, Trump this year threatened new restrictions on technology exports to China but ultimately rolled them back in most cases.

China’s cybersecurity regulator has summoned Nvidia to a meeting to clarify whether its H20 AI chip poses any backdoor security risks, Reuters reported in August; Nvidia denied this claim.

Chris McGuire, a technology and national security expert who worked at the US State Department until this summer, said Chinese companies will probably continue to purchase the H200.

“China would almost certainly agree to this,” said McGuire, who is now a member of the Council on Foreign Relations. “Given that the H200 is better than any chip the Chinese can make, not doing so would be self-defeating.” But Craig Singleton, a senior fellow at the Washington think tank Foundation for Defense of Democracies, said it remained unclear how Beijing would react to US export approvals.

“Chinese companies want H200s, but the Chinese state is driven by paranoia and pride – paranoia about backdoors and dependence on US chips and pride in pushing domestic alternatives,” Singleton said. “Washington may approve the chips, but Beijing still needs to let them in.” (Reporting by Jasper Ward and Michael Martina in Washington, Karen Friefeld in New York and Stephen Nellis in San Francisco; Writing by Doina Chiacu; Editing by Leslie Adler, Rod Nickel and Jamie Freed)