President Donald Trump has authorised Nvidia and AMD to resume limited sales of artificial intelligence chips to China, marking a significant shift in U. S. trade policy. The agreement allows the companies to sell specific AI chips in exchange for a 15% revenue share paid to the U. S. government. This move deviates from previous strategies aimed at restricting China's access to advanced semiconductors due to national security concerns.

The deal includes Nvidia's H20 chip and AMD's MI308, both intentionally downgraded for export. However, the Trump administration is considering extending this arrangement to Nvidia's more advanced Blackwell chips, albeit in a scaled-down form. Even with a 30%–50% performance reduction, these chips would still outperform China's domestic alternatives, potentially giving Nvidia and AMD a competitive edge in the Chinese market.

Chinese authorities have responded cautiously to the deal. The Cyberspace Administration of China has cautioned major domestic tech firms, including Tencent, ByteDance, and Baidu, over their purchases of Nvidia's H20 AI chips, expressing concerns about national security and data privacy. The government has advised against using these chips in government-related projects and, in some cases, ordered a suspension of purchases.

Despite these concerns, demand for the chips remains high due to their superior performance. Nvidia has emphasized that the H20 is not a military or government-focused product, noting that China does not rely on U. S. chips for official uses. The company is also preparing to launch a new artificial intelligence chip for the Chinese market at a significantly reduced price compared to its previously restricted H20 model. The upcoming GPU, part of Nvidia's latest Blackwell-architecture AI chips, is expected to cost between $6,500 and $8,000, making it substantially lower than the H20's price tag of $10,000 to $12,000.

The Trump administration's decision to allow the sale of these downgraded chips represents a significant shift from the previous administration's approach to semiconductor exports. While the move has been welcomed by Nvidia and AMD, it has raised concerns among some lawmakers and analysts about the potential erosion of national security safeguards and the risks of enabling Chinese progress in AI.

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