(Washington) The Trump administration’s decision has enabled NVIDIA to re-open the shipment of H20 artificial intelligence chips to China, which will strengthen China’s military capabilities and expand its ability to compete with the United States in AI.
“The H20, a cost-effective and powerful AI reasoning chip, is far beyond the capabilities of China’s Indigenous peoples, will bring about a significant increase in Chinese AI development,” Michigan Republican Chairman John Mourenard said on Friday (July 18) in a letter from Commerce Secretary Howard Lutznick. “We must not allow these important artificial intelligence assets to be sold to Chinese entities.”
Moolenaar’s letter follows signs that certain types of AI processors from NVIDIA and rival advanced microdevices will be able to return to China after limiting sales of less advanced components in April. Lutnick and other officials justified the step by saying that Chinese companies could already get parts equal or better than Nvidia’s H20.
Washington has yet to formally approve H20 shipments, Nvidia CEO Jensen Huang said Wednesday, but the company is looking forward to those licensing soon. The amount of sales the US plans to allow is still unknown. Some Trump authorities reported by Bloomberg have personally protested the decision to allow such exports.
Moolenaar requested a briefing from the Commerce Department by August 8th to explain the rationale for the policy change. He also made clear about how the US will issue a license for the H20, and how many chips will be cleared for the ultimate shipping to China.
“By approving the H20 mass sales, China could provide the computational power needed to develop powerful AI models that are open to users for free, as DeepSeek did with R1,” Moolenaar said. “Like China has done in many other industries, this is a deliberate strategy to gain market share and become a global standard.”
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The Commerce Department did not immediately respond to requests for comment, but Nvidia declined to comment.
Officials, including Treasury Secretary Scott Bessent, cast a policy shift in H20 as part of their efforts to ensure access to rare earth minerals from China, the heart of continued trade negotiations, despite previous claims to allow H20 exports.
China’s Commerce Department said on Friday that the US should abandon its “zero-sum thinking” and scrap “unfair” trade restrictions when it commented on Washington’s lifting the H20 chip ban. The ministry also suggested that the tipping ban was not included in recent negotiations.
Bessent and Lutnick also argued that Washington should rely on the US ecosystem for China’s AI development, robbing Shenzhen-based Huawei technology of revenue and know-how coming from the wider customer base of the home market. “We want to sell China to the point where developers get hooked on the American technology stack,” Lutnick told CNBC on Tuesday.
The US effectively banned the sale of advanced chips to China in 2022, and has strengthened these controls several times. Nvidia is not yet permitted to ship to China, the most advanced AI processors, which account for around 90% of its hardware market.
The H20 is widely sought in China, but mainly due to its memory bandwidth, which is particularly suitable for inference. This is the point where the AI model recognizes patterns and draws conclusions. Bloomberg
