Trump Administration's Motive in Allowing NVIDIA AI Chip Exports to China

【Silicon Valley=Hong Chang-ki Correspondent】

The US Donald Trump administration did not attach much significance to NVIDIA's H20 chip, which is to be re-exported to China, as it is considered the lowest performing among NVIDIA's AI chips. However, they emphasized that it is in the US interest to continue using America's cutting-edge AI technology so that the US remains ahead of China in the AI race. This strategy is explained as a way to make Chinese companies dependent on US AI chips by supplying them with US technology.
On the 15th (local time), according to CNBC, Secretary Howard Lutnick said, "We must consider that the H20 is an old chip," adding, "Biden allowed the sale of H20 to China, and we reconsidered that decision. But now NVIDIA has released the latest chip."
In fact, NVIDIA unveiled its latest AI chip Vera Rubin at the annual developer conference (GTC) in March this year and began selling the AI chip Blackwell, which was unveiled last year. The H20 chip, which NVIDIA will resume exporting to China, is based on the same core technology as NVIDIA's Hopper generation chips. However, compared to the H200 and H100 chips sold in the US, it is of lower specification. Nevertheless, CNBC's analysis is that Chinese companies are satisfied with the low-spec, slow H20 chip.
Secretary Lutnick emphasized that "the H20 chip, which the Trump administration allowed to be sold this time, is the lowest in terms of performance standards," and that the US will not export the latest performance AI chips to China.
He said, "We don't sell the second or third best products," adding, "But I think it's okay to sell the fourth best product to China."
Secretary Lutnick explained that it is Trump's idea that the US develops chips that are 'one step' ahead of the AI chips that China can develop on its own and allows the export of lower specifications to China.
David Sachs, who oversees the Trump administration's AI and cryptocurrency policies, also said in a broadcast interview that day that he hopes countries around the world will use US AI chips, comparing it to the status of the dollar as the key currency. He emphasized, "AI is like the dollar," adding, "We want our AI to become the key currency and the world standard."



Regarding the permission to export the H20 chip to China, Secretary Lutnick stated, "The Biden administration allowed the purchase of the H20 chip by China last year, but we blocked it, and after reaching an agreement on rare earths with China, we will start selling chips to China again." The agreement mentioned by Secretary Lutnick is an agreement reached between the US and China during the second trade negotiations held in London, UK, last June, to exchange China's export control of rare earths to the US and the partial lifting of US export controls to China. The US agreed to allow the export of NVIDIA's H20 chip to China in exchange for the resumption of China's rare earth exports to the US.
Scott Besant, Secretary of the Treasury, also said that day, "The permission to export the H20 chip to China can be said to be a negotiation card we used in Geneva and London."
In an interview with the US media that day, Secretary Besant explained that the US used the H20 chip export control to strengthen its negotiating power during trade negotiations with China held in Geneva, Switzerland, last May and in London last June. He explained that the H20 export control was discussed in the negotiations at the time, saying, "China had what we wanted, and we had what China wanted."
Previously, NVIDIA had been exporting the lower-performance H20 chip to China since 2022 after the former Biden administration restricted the export of NVIDIA's high-performance AI semiconductors to curb China's AI technology development. However, the Trump administration controlled exports by requiring government approval when NVIDIA exported the H20 chip to China in mid-April.





theveryfirst@fnnews.com Hong Chang-ki Reporter