China's Lukewarm Response to US AI Chip Approval: A Sign of Self-Sufficiency and Political Posturing?

US President Donald Trump has allowed Nvidia to resume sales of a key AI chip in China, but Beijing's response has been lukewarm. China's rapidly advancing chip industry has made significant strides despite US export controls, and the country is confident in its self-sufficient semiconductor supply chain. However, China still needs America's chips and technology, and the cold shoulder may represent political posturing to maintain access to advanced AI processors blocked under US export controls.

US President Donald Trump has allowed Nvidia to resume sales of a key AI chip in China, a move that has sparked mixed reactions from Beijing and US lawmakers alike. The decision, which came in August 2025, permits Nvidia to sell its H20 AI chip to China, reversing a ban that had been in place since April [1].

The move has been criticized by a group of US senators, including Chuck Schumer, Mark Warner, and Elizabeth Warren, who expressed concerns about national security. They argue that the sale of these chips could bolster China's military capabilities and questioned the legality of Trump's revenue-sharing agreement [1]. Nvidia, however, maintains that its chips do not enhance military capabilities and that the ban had cost American taxpayers billions of dollars without any benefit [1].

Beijing's response to the policy reversal has been noticeably lukewarm. Despite long-standing calls for Washington to ease export controls, China has called the chip a security risk and summoned Nvidia for explanations. The country's cyberspace watchdog and industry ministry have urged firms to avoid using the H20 chip, citing security concerns such as tracking and positioning capabilities [2].

The lukewarm response from Beijing may reflect China's drive to build a self-sufficient semiconductor supply chain. China's chip industry has made significant strides despite US export controls, with some companies developing chips with performance comparable to or surpassing those made by Nvidia [2]. However, China still needs access to more advanced AI processors that remain blocked under US export controls.

The reversal of the ban has also fueled questions about Trump's transactional approach to national security, which some lawmakers consider off-limits to bargaining. Despite the mixed reactions, the US remains the leader in the high-stakes AI race, at least for now.

References:
[1] https://timesofindia.indiatimes.com/technology/tech-news/us-senators-including-chuck-schumer-slam-donald-trump-over-15-cut-on-nvidia-amd-ai-chip-sales-to-china-in-an-open-letter-say-our-national-security-and-military-readiness-relies-upon-/articleshow/123343344.cms
[2] https://keyt.com/news/2025/08/17/trump-gave-china-the-ai-chips-it-wanted-beijing-isnt-saying-thank-you/