NVIDIA Gains Green Light to Market High-End AI Chips to Select Chinese Customers, Trump Announces

A 25% Tariff Imposed on Transactions

The recent policy shift now permits NVIDIA to distribute its H200 processors, a step down from their top-tier models, to China. Previously, sales were restricted to the H20, which China had opted not to purchase. President Trump relayed this development via Truth Social, noting the United States will impose a 25 percent tariff on these transactions, as confirmed by the Commerce Department.

In discussions with China's President Xi Jinping, Trump noted positive feedback regarding the adjustment. As the Commerce Department works through finalizing the arrangements, a similar stance is anticipated for U.S. tech companies like AMD and Intel. In a bid to safeguard national security, cutting-edge models like the Blackwell and forthcoming Rubin chips will remain off-limits. Initially, the White House had considered a 15% tariff, which has now been elevated to 25%.

The federal administration remains hesitant to completely blackball NVIDIA's top chips, mainly due to fears of ceding market share to Huawei if entirely excluded from China. While specific quantities of H200 processors and potential purchasing companies haven't been publicized, NVIDIA has expressed that enabling controlled sales to vetted clients is advantageous for the U.S.

Political and Security Ramifications

The decision has stirred debate across political aisles. Some Democratic senators criticize the move, citing possible detriments to both American economic interests and national security. Republican voices echo this sentiment, warning of potential technology appropriation by China. Representative John Mollenaar indicated that NVIDIA might face significant threats from intellectual theft, suggesting China could duplicate and outpace NVIDIA's innovations.

Black Market Concerns and Comparative Technologies

Despite export limitations, reports suggest black market dealings have funneled around $1 billion worth of Blackwell B200 and other advanced NVIDIA processors into China. These products hold superior capabilities compared to the H20 models, created under previous trade constraints for Chinese markets. NVIDIA highlights that its B200 series outpaces the H200 by nearly tenfold in certain operations, with the H200 itself being six times more efficient than the H20.

While Washington's endorsement doesn't guarantee Chinese acquisitions of these chips, there is skepticism due to China's directive against using U.S. tech. Huawei leads China's efforts in AI technology, currently rolling out an ambitious roadmap to compete with NVIDIA and AMD standards. Yet, tech analysts like Richard Windsor remain steadfast in the opinion that NVIDIA's technology is still significantly advanced compared to domestic Chinese offerings.