Jensen Huang looks like he’s going to have a lot of fun this week in China. Nvidia’s CEO was seen enjoying a leisurely bike ride and browsing a fresh fruit stand in Shanghai, as well as enjoying warm beef at a modest restaurant in Shenzhen.
Carefree sightseeing is not only about good optics. Huang has real reason for optimism: His long-running lobbying campaign in Washington is finally paying off. While Huang wandered around China, there were many of them news websites reported that Beijing has approved the sale of hundreds of thousands of high-performance Nvidia H200 AI chips to Chinese companies.
According to Reuters, China does agreed to allow ByteDance, Alibaba and Tencent will collectively buy more than 400,000 chips under conditional licenses granted during Nvidia’s CEO’s visit. More approvals can be expected in the coming weeks. (Nvidia and the tech companies did not immediately respond to requests for comment.)
The alleged chip sale is the culmination of a stunning reversal of US policy last year. Under the Biden administration, the United States has sharply tightened export controls on high-end AI chips and banned sales of models such as the H200 to Chinese customers over national security concerns. The restrictions were aimed at limiting Beijing’s ability to develop powerful artificial intelligence systems for military or other sensitive applications.
However, under President Trump, a different logic prevailed – promoted by Huang and the White House artificial intelligence and cryptocurrency czar David Sacks. They argued that allowing China access to some U.S. AI chips was better than completely handing over such a immense and vital market to Chinese chipmakers, both for economic reasons and because it would theoretically keep Chinese companies dependent on U.S. technology.
In recent internal discussions, White House officials also justified the H200 sale by pointing to the continued smuggling of advanced chips into China, which two people familiar with the matter said proves they believe U.S. restrictions are ineffective. Officials say allowing narrow, regulated sales is preferable to an foggy gray market that gives U.S. authorities little insight into where the chips might ultimately go.
The White House did not immediately respond to a request for comment.
It’s not just Huang and the Trump administration who will likely walk away ecstatic. By allowing domestic companies to purchase H200 chips in narrow quantities, Beijing has a chance to achieve two strategic goals at once, says Samuel Bresnick, a research fellow at Georgetown’s Center for Security and Emerging Technologies.
China’s tech champions can now gain access to the computing power they desperately need to train powerful, pioneering artificial intelligence models on par with the latest offerings from OpenAI and other U.S. labs. But by maintaining tight control over who buys Nvidia’s hardware, Beijing is helping ensure that demand for Huawei chips remains high and that companies continue to receive mighty incentives to continue building China’s domestic semiconductor ecosystem.
This result is “excellent evidence that David Sacks’s idea of making China dependent on American technology is simply not the case,” Bresnick says. “I see this as evidence that China is completely uncomfortable with the idea of Nvidia flooding its own burgeoning chip industry.”
But the real damage may come from whiplash in Washington. Over the years, policymakers have sent mixed signals about what the United States wants to achieve with chip control, and China is watching closely. “The worst thing we can do is just go back and forth,” Bresnick says. “We have already given China the imperative to launch its own chips while giving them access.”
This is the release Zeyi Yang AND Louise Matsakis Newsletter produced in China. Read previous newsletters Here.