U.S. approves Nvidia H200 China exports under new restrictions

Under the new rules, these chips must go through testing by an outside lab to check their AI performance before heading to China. Chinese buyers cannot receive more than half of the total chips sold to American customers.

Nvidia needs to prove it has enough H200 chips available in the United States. Chinese companies buying these chips must show they have proper security measures in place and promise not to use them for military work. These requirements did not exist before.

President Donald Trump said last month he would permit the chip sales if the U.S. government received a 25% fee. Critics from both political parties attacked this plan, saying the chips could strengthen Beijing’s military and hurt America’s lead in artificial intelligence technology.

Jay Goldberg, who analyzes stocks for Seaport Research, described the export limits as a middle-ground solution that puts some controls on Nvidia’s sales to China but might be tough to monitor properly.

“As we have seen, companies have found ways to get access to those chips, and the U.S. government appears highly transactional in their approach to chip exports,” Goldberg explained. “Put another way, this looks like a Band-Aid, a temporary attempt to cover the huge gap among the U.S. government’s export policy makers.”

Massive Chinese demand exceeds supply

Chinese technology firms have already ordered more than 2 million H200 chips, which cost about $27,000 each, according to a report from last month. This number is much higher than Nvidia’s current stock of 700,000 chips.

At the Consumer Electronics Show in Las Vegas last week, Nvidia’s CEO Jensen Huang told reporters the company was increasing production of H200 chips. He said strong demand from China and other countries was pushing up rental prices for H200 chips already running in cloud computing centers.

Saif Khan, who worked as director of technology and national security on the White House National Security Council during Joe Biden’s presidency, warned the new rule would give China’s AI programs a major boost.

“The rule would allow about two million advanced AI chips like the H200 to China, an amount equal to the compute owned today by a typical U.S. frontier AI company,” Khan stated. “The Administration will also face challenges enforcing the rule’s know-your-customer requirements that restrict Chinese cloud providers from supporting nefarious uses.”

Policy reversal from Biden Era

These worries had led the Biden administration to block sales of advanced AI chips to China completely. However, the Trump administration, guided by White House AI director David Sacks, believes selling advanced AI chips to China will discourage Chinese rivals like the heavily penalized Huawei from working harder to match the top chip designs from Nvidia and AMD.

When Trump announced the sales last month, he promised they would ship to China “under conditions that allow for continued strong National Security.”

Questions remain about whether the administration will actually enforce any restrictions on chip shipments, or even if Beijing will permit these sales inside China. Given past smuggling operations worth $160 million, enforcement challenges loom large. Last month, reports indicated the U.S. had started a review that could lead to the first chip shipments to China.

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