US Policy and Industry Support
According to Trump, the purpose of allowing Nvidia to sell its product is to ensure that US National Security, US jobs, and US AI Technology continue to be the lead industry in the world.
His authorization of these sales to “approved contacts”, comes after persistent lobbying by Nvidia's CEO Jensen Huang to reduce the restrictions that have prevented the company from selling its product to China.
Trump also recently reversed his earlier decision that banned all chip sales to China in July, however, he has given Nvidia an ultimatum that it must pay 15% of its revenue on sales to China to the US government.
Trump further stated in a subsequent statement, “$25% will be paid to the United States of America”, which leaves some uncertainties regarding the final terms of this agreement.
Nvidia expressed joy over this new policy, stating that it allowed US chip companies to compete in the global marketplace, into China, while still being vetted through the Department of Commerce for Integrity and not being sold into the hands of bad actors in China.
Nvidia further stated that the H200 AI chip is one generation behind the Blackwell chip, which is considered the latest, highest-level AI semiconductor on the market today. Following the announcement of this policy, Nvidia's stock price slightly increased.
Effect on China and Worldwide Supply Chains
Beijing had instructed local High-Tech companies to no longer purchase Nvidia products for the Chinese market due to earlier restrictions being placed on such purchases. Huang has reiterated the importance of Access to AI technology for the entire world, including China, and has further stated that the pace of innovation in the development of the chip ecosystem in China is moving at a rapid pace.
Analysts have suggested that the authorization of limited H200 sales could give the US time to come to an agreement with China over rare-earth minerals. Rare-earth minerals are vital components in the manufacturing of Electronics.
China has control of nearly all processing of rare-earth minerals and therefore has a tremendous amount of leverage within the supply chain of the global marketplace. While these actions may provide assistance to the High-Tech industry in China, experts still believe that Beijing will continue its ambitions to lower its dependence on US High-Tech products.
Researchers have further reported that the People's Liberation Army of China has utilized highly advanced chips manufactured by US manufacturers in the development of AI-enabled weapons systems for military use.
Some analysts have stated that the removal of access restrictions to high-performance chips will bolster China's military capabilities in terms of battlefield technology when competing against Western nations.
