On Tuesday (January 13), the Trump administration officially approved the sales of Nvidia’s second most powerful AI chips to China, establishing a rule that is expected to initiate shipments of the H200, amidst significant concerns from China skeptics in Washington.
Under the new regulations, a third-party testing lab will evaluate the chips to ensure they meet technical AI specifications before shipping to China, which is restricted to receiving no more than 50% of the total chips sold to American customers.
Nvidia must verify that there are sufficient H200s available in the U.S., while Chinese buyers are required to prove “adequate security measures” and must not utilize the chips for military purposes. These stipulations had not been previously defined.
Both Nvidia and the Chinese embassy in Washington did not respond immediately to inquiries for comments.
Last month, U.S. President Donald Trump announced he would permit the chip sales in exchange for a 25% fee to the U.S. government. This decision faced backlash from China hawks across the political spectrum due to fears that the chips could enhance Beijing’s military capabilities and undermine U.S. advantages in artificial intelligence.
Jay Goldberg, an equity analyst at Seaport Research, noted that the export caps seemed to be a compromise that imposed some limitations on Nvidia’s sales to China, but could prove challenging to enforce.
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“As we’ve observed, (Chinese) companies have devised methods to access those chips, and the U.S. government’s approach to chip exports appears to be highly transactional,” Goldberg remarked. “In simpler terms, this resembles a temporary fix, a stopgap measure to address the significant gaps in the U.S. government’s export policies.”
CHINESE H200 ORDERS TOP 2 MILLION
Chinese tech firms have ordered over 2 million H200 chips, which are priced around $27,000 each, according to a report from Reuters last month, surpassing Nvidia’s stock of 700,000 chips.
During the Consumer Electronics Show last week in Las Vegas, Nvidia CEO Jensen Huang stated that the company was increasing production of H200 chips due to strong demand from both China and the global market, leading to a rise in rental prices for the H200 chips currently housed in cloud computing data centers.
Saif Khan, who previously served as the director of technology and national security on the White House National Security Council under former President Joe Biden, stated that the new rule would significantly enhance China’s AI capabilities.
“This rule would permit approximately two million advanced AI chips like the H200 to flow to China, equating to the computational power currently held by a standard U.S. frontier AI firm,” Khan explained. “The administration will also encounter challenges in enforcing the rule’s ‘know-your-customer’ requirements that limit Chinese cloud providers from facilitating unethical applications.”
These concerns had led the Biden administration to prohibit the sale of advanced AI chips to China. However, the Trump administration, with White House AI czar David Sacks at the helm, contends that allowing advanced AI chip shipments to China ultimately deters Chinese competitors—such as the heavily sanctioned Huawei—from intensifying efforts to catch up with Nvidia’s and AMD’s leading chip designs.
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When Trump announced the sales last month, he indicated that they would be conducted under conditions designed to maintain robust national security.
Nevertheless, questions have emerged regarding whether the administration will impose any actual restraints on chip shipments, or if Beijing will permit their sale domestically.
Reuters reported last month that the U.S. had initiated a review that could facilitate the initial shipments of these chips to China.
