The United States government has given Nvidia permission to export advanced artificial intelligence chips to China. This decision represents a significant policy change from previous restrictions.
New Licensing Process for AI Chips
The US Commerce Department announced the approval on Tuesday. Nvidia can now sell its H200 artificial intelligence chips to Chinese buyers under specific conditions. The Bureau of Industry and Security will review each export application individually rather than automatically rejecting them.
This new case-by-case approach replaces the previous blanket ban on advanced AI chip exports to China. The policy shift follows an announcement by President Donald Trump last month. He said Nvidia could export the H200 chips if the company demonstrates sufficient domestic supply within the United States.
Revenue Sharing Agreement
President Trump revealed another important detail about the arrangement. He said he reached an understanding with Chinese President Xi Jinping regarding these chip exports. According to this agreement, the US government will receive twenty-five percent of the revenue from H200 sales in China.
Limitations and Restrictions Remain
Despite this regulatory opening, significant restrictions continue to apply. Nvidia's most advanced processors remain completely off-limits to Chinese buyers. The H200 chips themselves represent older technology compared to Nvidia's latest offerings.
Industry estimates suggest the H200 chips are approximately eighteen months behind Nvidia's most current products. This technological gap ensures China cannot access cutting-edge AI hardware through these exports.
Uncertain Chinese Demand
The outlook for H200 chip demand in China appears uncertain despite the regulatory change. Reports indicate Chinese authorities have been encouraging technology firms to rely more heavily on domestically produced chips.
According to sources speaking to AFP, Chinese officials have told companies that approval to purchase H200 chips will only come in specific situations. These limited scenarios include university research projects and development laboratories. The Information previously reported that Chinese authorities asked companies to pause H200 purchases while considering domestic procurement requirements.
Political Reactions and Industry Context
This policy change marks a clear departure from the approach taken under former President Joe Biden. His administration imposed sweeping restrictions on advanced AI chip exports over concerns about Chinese military applications.
Democratic lawmakers in Congress have criticized the new policy direction. They call it a serious error that could strengthen China's military and economic position in artificial intelligence.
Nvidia CEO Jensen Huang has publicly supported allowing some advanced chip sales to China. He argues that maintaining US technology as the foundation for global AI systems remains important.
Nvidia's Market Position
The H200 chips are graphics processing units essential for training artificial intelligence models. These GPUs power the generative AI surge that began with ChatGPT's launch in 2022. Nvidia currently dominates the global GPU market and has become the world's most valuable company amid intense AI demand.
The United States and China continue their fierce competition for artificial intelligence leadership. This export approval represents one development in their ongoing technological rivalry, with both nations seeking advantage in the critical AI sector.
