The U.S. government has cleared approximately 10 Chinese firms to acquire Nvidia's H200 AI chip, a move that critics warn could diminish America's technological advantage and divert crucial resources from domestic industries. This decision comes as Nvidia CEO Jensen Huang joined President Donald Trump on a trip to Beijing, seeking to finalize sales despite stalled efforts.
President Trump negotiated an arrangement under which the U.S. would receive 25% of the revenue from these chip sales, a structure requiring the chips to pass through U.S. territory before shipment to China. Sources describe this mechanism primarily as a workaround to legal constraints, rather than a direct imposition of export fees.
Nvidia CEO Jensen Huang, initially not part of a White House delegation to Beijing, joined the trip after an invitation from President Trump, who picked him up in Alaska en route to a summit with Chinese President Xi Jinping. Huang told state broadcaster CCTV on Thursday that he hoped Trump and Xi would build on their relationship to improve two-way ties.
Before U.S. export curbs tightened, Nvidia commanded approximately 95% of China's advanced chip market, with China once accounting for 13% of its revenue. Huang previously estimated China's AI market alone would be worth $50 billion this year, highlighting the significant corporate interest in maintaining access to the market.
Elite Interests Over National Security
The U.S. Commerce Department approved Chinese companies including Alibaba, Tencent, ByteDance, and JD.com, along with distributors like Lenovo and Foxconn, to purchase the H200 chips. Each approved customer is permitted to acquire up to 75,000 chips under the U.S. licensing terms.
Chris McGuire, senior fellow for China and emerging technologies at the Council on Foreign Relations, stated that "Any deal that allows Nvidia to sell more chips to China means fewer Nvidia chips for U.S. firms, and a smaller U.S. lead in AI over China." McGuire further added, "It is remarkable that President Trump keeps getting convinced to put Nvidia's interest ahead of America's." This explicitly frames the issue as a zero-sum game where U.S. national interest is sacrificed for corporate gain.
Huang has warned that U.S. export controls are eroding the company's foothold in the market, claiming its share of AI accelerators in China has effectively fallen to zero. This corporate perspective prioritizes market access over the strategic implications for national security.
Beijing's Strategic Resistance
Despite U.S. approval, the deals have stalled, with Chinese firms reportedly pulling back after guidance from Beijing. Commerce Secretary Howard Lutnick noted at a Senate hearing last month that "the Chinese central government has not let them, as of yet, buy the chips, because they're trying to keep their investment focused on their own domestic industry."
Beijing's hesitation stems from a strategic calculation, fearing that imports could weaken its push to develop homegrown AI chips. While China's AI chips still lag Nvidia, firms like DeepSeek increasingly promote their reliance on domestic chips, including those developed by Huawei.
Scrutiny in China has intensified after the State Council recently issued two supply chain security regulations, initiating a government-wide effort to identify and eliminate potential foreign dependencies in critical technology infrastructure. This reflects a clear national strategy to secure its own technological future.
Undermining National Advantage
The path to completed sales has been obstructed by a "tangle of requirements" on both sides. U.S. rules issued in January of the same year require Chinese buyers to demonstrate "sufficient security procedures" and confirm the chips would not be used for military purposes. Nvidia must also certify sufficient inventory in the United States.
The arrangement for U.S. revenue share has prompted unease in Beijing over potential tampering or hidden vulnerabilities, even as sources describe it as a legal workaround. This highlights a fundamental distrust inherent in such transnational deals that bypass direct national control.
The continued delay in sales has been welcomed by China hardliners in Washington, aligning with voices advocating for a stronger national stance against technological transfers that could empower rivals.