On Monday, US President Donald Trump announced that he would allow Nvidia, a well-known tech company, to sell an advanced type of computer chip to select customers in China. This chip is important for making advancements in artificial intelligence (AI), which includes technologies like smart assistants and self-driving cars.
Balancing competition and commerce
The decision highlights a conflict between protecting the country's safety and promoting economic growth. There are worries that if the country allow the sale of advanced computer chips to China, it could help them improve their artificial intelligence technology and become more of a competitor to the United States. Conversely, there is a strong desire to support the growth of the American AI ecosystem through companies like the chipmaker Nvidia.
The approved chip, the H200, is not Nvidia's most advanced product. The company's cutting-edge chips, including the Blackwell and the forthcoming Rubin, were explicitly excluded from Trump's approval.
The announcement and rationale
Trump stated on social media that he had informed Chinese leader Xi Jinping of his decision, claiming that "President Xi responded positively!"
He further justified the policy, saying, "This policy will support American Jobs, strengthen US Manufacturing, and benefit American Taxpayers". Trump also noted that the Commerce Department was "finalising the details" to allow other chipmakers, such as AMD and Intel, to sell their technologies abroad.
Geopolitical and corporate context
The approval of licenses for the Nvidia H200 chips is seen by many as a reflection of the significant influence and close relationship between the company's founder and CEO, Jensen Huang, and the president.
However, this move revives a central concern of the Biden administration's export limits: the risk that China might adapt the chips to develop its own AI products in ways that ultimately pose national security risks to the U.S.
Nvidia, which boasts a $4.5 trillion market capitalization, saw its stock price rise slightly in after-hours trading following Trump's announcement.
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