US Lifts Ban on Nvidia Chip Exports to China, Potentially Giving Beijing Advantage in AI Race

The Trump administration has lifted a ban on US tech giant Nvidia's H20 microchip exports to China, potentially giving Beijing a major advantage in the global AI race. The reversal is seen as a response to the booming black market demand for high-powered US chips in China and may follow a philosophy in Silicon Valley that selling more chips will pour more into research and development. Experts warn that limiting the exports of microchips incentivizes China to accelerate domestic developments. The US is also trying to maintain leverage in a broader geopolitical trade-off involving China's critical exports, rare earth elements.

The Trump administration has lifted a ban on US tech giant Nvidia's H20 microchip exports to China, potentially giving Beijing a significant advantage in the global AI race. This reversal, announced by White House National Economic Adviser Kevin Hassett, is seen as a response to the booming black market demand for high-powered US chips in China [1]. The move follows a philosophy in Silicon Valley that selling more chips will pour more back into research and development [2].

The H20 chip, designed to comply with US export restrictions while catering to the Chinese market, is a step-down from Nvidia's top-tier chips (H100 and B200) [3]. While less powerful, these chips still enable model training at scale and could pose a strategic risk if accessed by adversaries. The US hopes to maintain leverage in a broader geopolitical trade-off involving China's critical exports, rare earth elements, while keeping China dependent on US technology [3].

Experts warn that limiting the exports of microchips incentivizes China to accelerate domestic developments. China's push to dominate AI is already underway, with tech giants like Huawei and Biren Technology ramping up their own AI accelerators [3]. The current backlog at the U.S. Department of Commerce, which delays thousands of export license applications, including Nvidia's AI chips destined for China, is exacerbating the issue [2].

The stakes are massive. Nvidia's TSMC orders soared despite uncertainty, reflecting strong demand from China. However, the Commerce Department's silence may prove the loudest factor in reshaping the future of AI leadership. The export license delays, stemming from internal staffing disruptions and tightened national security reviews, are causing a permanent shift in global tech supply chains [2].

For now, Nvidia waits. Its chips are ready, demand is strong, and factories are producing, but Washington's silence may prove the loudest factor in reshaping the future of AI leadership.

References:
[1] Reuters. (2025, July 29). U.S. allowed Nvidia chip shipments to China to go forward, Hassett says. Retrieved from https://www.reuters.com/world/china/us-allowed-nvidia-chip-shipments-china-go-forward-hassett-says-2025-07-29/
[2] Coolest Gadgets. (2025, August 1). Record U.S. license backlog stalls Nvidia’s AI chip exports, threatening America’s competitive edge in global tech trade. Retrieved from https://coolest-gadgets.com/us-export-licensing-gridlock-hits-nvidia-slows-global-tech-shipments/
[3] ABC News. (2025, August 3). Did Trump just give China a major advantage on AI? Retrieved from https://www.abc.net.au/news/2025-08-03/did-trump-just-give-china-a-major-advantage-on-ai/105598426