- Nvidia reversed its China exit, resuming H20 chip sales linked to rare-earth negotiations.
- U.S. claims China will only receive a downgraded AI chip, not advanced technology.
- Congressman Krishnamoorthi criticized the move as a threat to U.S. tech security.
- Export rules remain unclear after recent regulatory changes and trade tensions.
After announcing plans to withdraw from the Chinese market just last month, Nvidia has now confirmed that it will resume sales of its H20 AI chip in China.
This decision is reportedly tied to ongoing discussions between the United States and China over rare-earth elements, which are essential for a range of technologies including electric vehicle batteries and advanced computing systems.
U.S. Commerce Secretary Howard Lutnick stated that Nvidia’s renewed activity in China is part of a broader strategy connected to rare-earth negotiations. China currently dominates the global supply of these minerals, giving it substantial leverage in trade talks with the U.S.
China to Receive a Stripped-Down Chip
Despite the resumed sales, U.S. officials insist that China will not gain access to top-tier American technology. Lutnick made clear during an interview with CNBC that China would only be receiving Nvidia’s “fourth-best” chip. He emphasized that the U.S. is not compromising its most valuable or sensitive AI technologies.
Nvidia’s H20 chip, while capable, is a restricted version that meets U.S. export regulations. Its release reflects a calculated balance between market access and national security interests.
Political Opposition Emerges
The decision to allow sales to China has already drawn criticism from some U.S. lawmakers. Congressman Raja Krishnamoorthi voiced strong opposition, calling the move inconsistent with the administration’s previous stance on tech exports.
Krishnamoorthi warned that the decision risks giving strategic competitors access to sensitive technologies, even in a downgraded form. He called for a more consistent and cautious approach to tech exports, particularly in light of rising global tensions.
Export Rules Still in Limbo
The policy environment remains uncertain. In May, the Trump administration formally revoked the Biden-era AI Diffusion Rule, leaving the U.S. without a clear framework on AI chip exports. No replacement rule has been announced.
Amid concerns about smuggling, there are reports that the U.S. may tighten export controls to additional countries like Thailand and Malaysia. In response, Malaysia implemented new trade permits for U.S.-made AI chips earlier this week, signaling that other nations are also preparing for regulatory shifts.
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