Representative image of an AI chip.
Credit: iStock Photo
San Francisco: Three months after shutting down Nvidia’s artificial intelligence chip sales to China, the Trump administration has reversed course.
On Monday, the Silicon Valley company said in a blog post that the US government had approved sales of a China-specific AI chip known as the H20. Nvidia will still need licensing approval from the US government to fulfill those orders, but the Trump administration “has assured Nvidia that licenses will be granted,” the company said.
The decision came after Jensen Huang, Nvidia’s CEO, met Thursday with President Donald Trump. Huang has spent months lobbying politicians across Washington to keep China open for AI chip sales. China has the potential to deliver billions of dollars in sales for the world’s most valuable public company, which last week became the first to reach a $4 trillion valuation.
Huang has also visited China several times this year, including a trip to Beijing this week where he is scheduled to give a news conference Wednesday.
The Commerce Department and White House did not immediately respond to requests for comment.
The reversal has major implications for the race between the United States and China to develop AI. It will allow Chinese tech companies to restart purchases of Nvidia’s chips, which are regarded as ideal for running some of the calculations that power AI. Nvidia was slated to collect as much as $15 billion from sales of the H20 chip during its current fiscal year.
With the change, the Trump administration has also backed away from a signature effort to stay ahead of China in the AI race. The US government had been concerned that the Chinese military could use AI chips to coordinate attacks and develop weapons and had also wanted to preserve the US lead in developing AI systems.
In January, Commerce Secretary Howard Lutnick told Congress during his nomination hearing that he thought Nvidia and other companies “need to stop helping” China and stop allowing it to use “our tools to compete with us.”
Lutnick reiterated those sentiments last month. “They are trying to copy our technology and in the race for AI supremacy, they are behind us, but they are working with a central government out to get us,” he said of Chinese companies during testimony before a House subcommittee about his department’s budget.
The Trump administration’s previous restrictions on AI chip sales had posed a threat to Nvidia. Huang considers selling chips to China vital to Nvidia’s future because the country is home to 50 per cent of the world’s AI developers. China also spends more on chips than any other market in the world. He has said that he fears that exiting the market would allow Huawei, the Chinese tech giant, to increase its sales and eventually compete against Nvidia overseas.
Huang pressed the administration to roll back its restrictions on shipments of AI chips to China, arguing that closing off the China market will only hurt US tech companies. He has also urged the administration to get countries around the world to build on chips and software made by US companies.
“The American tech stack should be the global standard, just as the American dollar is the standard by which every country builds on,” Huang said during a podcast recorded last week in Washington with the Special Competitive Studies Project, a think tank.
Huang has a more optimistic view of US-China relations than many in Washington. During the podcast, he said that China is a “competitor and adversary, not our enemy.”
Some members of the Trump administration have gradually come around to share Huang’s perspective, including David Sacks, the White House’s AI and crypto czar.
The H20 is not Nvidia’s most powerful chip. To comply with US restrictions on sales to China, the company throttled the performance of a more powerful semiconductor, the H100, and began marketing it in China as the H20. But the H20 has significant memory capabilities that are valuable for the process of running AI, which is known as “inference.”
The Trump administration’s reversal could face pushback on Capitol Hill. In April, the House Select Committee on the Chinese Communist Party opened an investigation into Nvidia’s chip sales across Asia. The committee was trying to assess whether the chipmaker knowingly provided DeepSeek with critical technology, potentially in violation of US rules.