Understanding the US' Flip-Flop on Nvidia Chips and China
This short-term "win" is likely to become a longer-term security misstep.
After months of turbulence, the Trump administration recently reversed its export restrictions on Nvidia’s H20 chip, which it had enacted just a few months prior, citing national security concerns — what may become a longer-term national security misstep for the United States. Brought to you by Global Cyber Strategies, a Washington, DC-based research and advisory firm.
The One-Liner
The lack of clarity on what these chip sales will actually accomplish—and the obvious national security risks of deepening semiconductor business ties in China, including the funneling of chips into Beijing’s security apparatus—mean this short-term “win” is likely to become a longer-term security misstep.
The Column
This is an excerpt of the latest Barron’s column from our founder and CEO, Justin Sherman.
After months of turbulence, the Trump administration recently reversed its export restrictions on Nvidia’s H20 chip, which it had enacted just a few months prior, citing national security concerns. Once the government approves its export licenses, Nvidia will resume shipping the H20 chip to Chinese buyers.
In the past, Chinese companies, such as DeepSeek, have used Nvidia’s export-controlled chips to improve their AI models. The H20 chip is specificallyoptimized for AI inference.
The administration is framing its decision to undo its national security controls as part of a broader trade strategy, one in which semiconductors and AI applications are part of complex “deals” to benefit U.S. companies and the country. But the lack of clarity on what these chip sales will actually accomplish—and the obvious national security risks of deepening semiconductor business ties in China, including the funneling of chips into Beijing’s security apparatus—mean this short-term “win” is likely to become a longer-term security misstep.
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China’s huge market will be tempting for Nvidia, and the pressure to sell more products will grow. Nvidia’s chief executive, Jensen Huang, said so himself at a Beijing press conference. “I hope to get more advanced chips into China than the H20,” Huang said.
And the administration’s flip-flopping on chip export controls underscores how its threshold for what is considered “too risky” can easily shift, regardless of whether the security picture actually changes. H20 sales to China today could quite plausibly become sales of even more advanced chips tomorrow.
The H20 reversal echoes another area where the White House granted risky chip sales in favor of trade deals: the Middle East. In recent years, the U.S. scrutinized the United Arab Emirates for its AI collaboration with Chinese entities. But in June, the Trump administration struck an agreement with the UAE that paved a way for U.S. companies to sell Emirati AI firms hundreds of thousands of chips. The U.S. also moved to sell chips to Saudi buyers. Saudi Arabia poses its own set of tech diffusion and security risks to the U.S., to say nothing of its economic and technological ties to China.
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