Nvidia has announced plans to release its H20 AI chip specifically targeting the Chinese market, marking a significant shift in its strategy toward China. This follows June’s shocking announcement that the company would leave the Chinese market altogether. Nvidia is preparing to resume sales of its H20 AI chips to Chinese clients. This decision is made against the backdrop of ongoing United States – China trade talks over rare earth elements (REEs).
The H20 AI chip, considered Nvidia’s fourth best chip, is the most important chip in AI applications. The company’s decision to engage with the Chinese market again is closely tied to the complex trade dynamics involving REEs, such as lanthanum and cerium, which are essential components for various technologies including electric vehicle batteries. These elements are mostly mined in China, which is why they have been a key element in recent U.S.-China trade negotiations.
Now, Nvidia has backtracked and filed an application to resume sales of H20 chips. This decision further underscores the unpredictable landscape of U.S. export controls on AI technology. The U.S. government has been critically re-examining its export rules, particularly under the Biden administration. Fortunately for us, technology companies like Nvidia are artfully changing the narrative and acrobatically sidestepping this stormy pivoting landscape.
The Trump administration had gone so far as to contemplate tighter export restrictions on AI chips to countries such as Thailand and Malaysia. Malaysia has already imposed new trade permits on U.S.-made AI chips, making things even trickier for American tech companies.
U.S. Commerce Secretary Howard Lutnick commented on the current state of affairs, stating, “We don’t sell them our best stuff, not our second best stuff, not even our third best.” Specifically, U.S. policymakers are placing greater restrictions on technology exports to China. They are trying to find a middle ground between US economic interests and national security alarm.
U.S. Congressman Raja Krishnamoorthi welcomed these developments with a note of caution. In response, he stressed that any concessions might put U.S. technological advantages at risk. He stated that such actions “would not only hand our foreign adversaries our most advanced technologies, but is also dangerously inconsistent with this administration’s previously-stated position on export controls for China.”
