By authorizing Nvidia to sell chips in China designed for training large language models, the American president is breaking with a strategy pursued for several years (including by his own government) to slow down Chinese progress on AI.
It’s a dramatic turnaround and a solid win for Nvidia. Donald Trump has decided to authorize the global AI chip specialist to export its H200 processors to the Middle Kingdom. The president, who announced the news via his account on Truth Social, his favorite mode of communication, also opened the door to similar opportunities for AMD and Intel, two other American semiconductor giants that aim to compete with Nvidia on AI chips.
The H200 chip is certainly not the most powerful sold by Nvidia. She belongs to the previous generation, Hopper, lower than Blackwell and the future Rubin generation. On the other hand, it is six times more powerful than the H20, a restricted chip intended for the Chinese market which had been temporarily banned and whose export Trump reauthorized this summer. Given Nvidia’s technological lead, it is also one of the most powerful graphics processors on the market, widely used for training AI models, inference and supercomputing.
A break in American strategy
Even more than the summer authorization of H20 chips, not powerful enough to allow China to progress on AI, this announcement breaks with a strategy pursued for several years to deprive China of the best of American technology, in the hope of slowing down its progress on AI. The design of the most advanced chips, necessary to train cutting-edge AI models, is indeed an Achilles heel of China and a strong point of the United States.
This strategy was initiated by Trump himself. During his first mandate, he notably placed Huawei and several other Chinese companies on the Entity List, preventing American chip manufacturers from trading with them unless they acquired a license that was very difficult to obtain. In 2020, the Trump administration tightened the noose by banning foreign foundries using U.S. equipment or software from supplying Huawei with advanced chips, effectively cutting the business off from TSMC’s chips in Taiwan.
Biden’s policy continued this trend, outright banning the export of advanced AI chips to China in 2022, before extending the measure to less powerful AI chips a year later. The second Trump administration initially seemed to continue this logic, banning the sale of H20-restricted chips in China in April. A decision to which it returned to everyone’s surprise this summer, before going further, by putting its stamp on the sale of H200 chips in the Middle Kingdom.
Counterproductive bans?
Jensen Huang, the boss of Nvidia, who has become close to Donald Trump since his return to power, has naturally long positioned himself against the retaliatory measures taken against China, which are costly to his company. From 20/25% of Nvidia’s data center revenues (the division that includes AI chips) a few years ago, China has now practically fallen to zero following successive waves of bans.
Moreover, for Jensen Huang, depriving the Middle Kingdom of American technology will simply encourage Chinese companies to develop their own chips and market them to third countries, endangering American global domination of cutting-edge semiconductor design. Huawei has indeed grown by leaps and bounds over the past few years, although it still lags behind Nvidia. In addition, according to Mr. Huang, Chinese AI developers will begin to optimize their models so that they work with local chips rather than that of Nvidia, promoting the development of an entire ecosystem competing with that of the United States.
Jensen Huang certainly preaches for his parish, but he has strong allies within the Trump 2.0 administration. In particular David Sacks, Donald Trump’s advisor on everything related to AI, who shares the Nvidia boss’s arguments and was clearly able to convince the president in the face of supporters of a hard line against Beijing, also numerous among the Republicans.
A gift made in Beijing?
Still, not everyone is convinced by the argument of Jensen Huang and David Sacks. Several experts consider that Donald Trump has just given China a gift. This is particularly the case of Noah Smith, an American economist who regularly warns of the risks posed by the rise of Chinese technology and industrial strength.
“Selling chips and equipment to China will only help it move faster in its quest not only for semiconductor independence, but also for global market domination. The Chinese will not only be able to reverse engineer the American chips and equipment they get their hands on to close their technological gap, but also use this equipment to mass manufacture chips,” he wrote in a recent column criticizing Donald Trump’s strategic reversal.
An analysis shared by Michael C. Horowitz, a researcher on technology and innovation at the Council on Foreign Relations, a think tank. “Chinese Premier Li Qiang, DeepSeek CEO and other Chinese technology executives have explicitly pointed out that the lack of Nvidia chips is limiting the development of AI in China. The move will not only strengthen China’s ability to build cutting-edge AI models, it will also support its efforts to develop data centers capable of directly competing with American companies “So while the export of a single Nvidia chip, and not even the most advanced one, may seem minor to some U.S. observers, it is a major development for China,” he writes.
Donald Trump’s motivations
Several levels of analysis allow us to understand Donald Trump’s decision. The first reading is of a personal nature: thanks to a clever self-promotion campaign with the president, Jensen Huang would have managed to gain his trust and influence his decision-making. A reading consistent with the branch of capitalism that is developing under the Trump 2.0 administration, made up of state interventionism dictated by the personal choices of Donald Trump and the promotion of national champions. According to Bloomberg Intelligence, the decision could bring in between $10 billion and $15 billion in revenue per year for Nvidia.
This is the analysis drawn from Liam Keating, director of research at Ingenuity, a research firm. “The Trump administration’s decision to reauthorize the sale of H200 chips to China is not surprising. Nvidia has lobbied incessantly in this regard, making the argument that restricting its sales would only further encourage China to develop its own alternatives.” For the expert, however, it is not clear that China is taking the bait.
“The Middle Kingdom now wants to prioritize the development and adoption of processors made in China. Even if these processors are not yet capable of individually matching those of Nvidia, the Chinese bet is that they will be able to compensate for this gap through scale. Ultimately, China’s needs in terms of AI hardware could diverge from those of its American competitors. By choosing to adopt a “bare metal” approach, interfacing directly with the hardware rather than via layers CUDA that make up a large part of NVIDIA’s defensive moat, Chinese AI players will likely continue to shake up mainstream thinking. In short, expect many new “DeepSeek moments” in the years to come…”
A second level of reading is that Donald Trump resonates here above all in terms of domestic policy: the populist wing of his coalition showing signs of rebellion after the mess of the Epstein affair, the president is cajoling his supporters from Silicon Valley. Its ban on States from regulating AI themselves also goes in this direction,
A third reading is at the level of international economic policy. Donald Trump’s vision of trade is that the United States is being tricked by its partners through unfavorable terms, while its power would allow it to obtain much better agreements. The blank check given to Nvidia is thus accompanied by a 25% tax on the sales that Nvidia will make in China (a similar system had already been announced during the re-authorization of H20 chips this summer). Trump is therefore deploying a mercantilist policy where priority is given to commercial interests rather than questions of technological and military supremacy. This has the triple advantage of allowing him to illustrate his “art of dealing”, on which he has built part of his popularity; to show his fans that he is ready to fight to defend America’s economic interests; and to satisfy his supporters in Silicon Valley.
Finally, the fourth reading is geopolitical: Donald Trump would be careful not to offend China, fearing the damage that it could cause to the United States. Let us recall in this regard that earlier in the year the Middle Kingdom drew heavy artillery by limiting the export of several rare earths and precious ores, during two waves of restrictions announced in February and April.
The Busan agreement, signed on October 30 between the United States and China, granted a little respite by establishing a one-year suspension on five rare earths, associated products, equipment and technologies. Donald Trump would now do everything to hold this agreement in order to buy his country time to allow it to find alternatives to Chinese minerals, on which its chip industry and new technologies in general depend.
