Nvidia has already gone pretty far to make its attacks on China’s chip ambitions less complicated. The wealth of the company has been fucking up the semiconductor industry. In retaliation for US export controls on certain sensitive technology shipments to China, it created the H20 chip. Nvidia will need to do a careful dance around increasingly restrictive regulations to lead the pack. This expertise is critical for Intel to keep its deep roots in arguably the most important market for chipmakers.
During their administration, the Trump administration had made it harder for companies to obtain Nvidia’s H20 chips. Yet, more than $1 billion of the company’s chips still ended up in China. Against these odds, starting in May, Chinese distributors started selling H20 chips to dozens of data center OEMs and ODMs. These vendors buttress the military-civil fusion efforts of thousands of Chinese AI companies. Nvidia is looking to cash in on this tangled interconnection of demand.
In response, the U.S. government has invoked national security to impose strict limits on the sale of advanced chips to China. In April, the government effectively blocked Nvidia from selling its H20 chips to the region, requiring a special license for such transactions. According to new reports, advocates and local governments have made significant progress in negotiations with the Trump administration to roll back these regulations.
Nvidia’s CEO Jensen Huang dropped some pretty big news recently. The company expects to resume near-term sales of its H20 chips to China following this development. This reversal is the clearest indication yet that frictions over U.S.-China trade policy in the high-tech arena may be beginning to diffuse.
Second, Nvidia seems concerned about the issue that smuggling and unauthorized resale causes. They have had advanced notice of the serious risks that using bootleg chips would pose. An Nvidia spokesperson stated, “Trying to cobble together datacenters from smuggled products is a losing proposition, both technically and economically.” This release is timely, as it highlights the need to adhere to legal and regulatory requirements when trading in technology.
The spokesperson further emphasized the need for authorized products within data centers, stating, “Datacenters require service and support, which we provide only to authorized NVIDIA products.” While Nvidia had specific and concrete reasons for making this declaration, those concrete reasons are just the beginning.
China is still hugely important for Nvidia and other chipmakers. The hunger for higher-grade chips doesn’t stop there as the nation gets deeper into the pocketbook and into the development of artificial intelligence and other frontier technologies. As Nvidia works towards reinstating its H20 chip sales in China, it faces the dual challenges of regulatory compliance and competition from unauthorized distributors.