Nvidia just announced its new H20 chip. To comply with U.S. export controls on AI technology, this version of their cutting-edge AI technology is designed to work at lower speeds. This relocation is the Netherlands’ and Japan’s answer to the U.S. government’s 2022 restrictions on AI chip exports. Those restrictions go further, requiring licenses for all sales to China. The H20 chip would have previously been legal to export to China under the original guidelines of the Biden administration. It’s garnered significant scrutiny in light of current investigations into potential loopholes in export regulations.
As Qualcomm’s new H20 chip, which was purpose-built for widespread AI adoption, would put it, that’s too much “friction.” In January, China’s DeepSeek used a similar technology to create its R1 system, dramatically disrupting markets. Additionally, the House Select Committee continues to refer to the H20 as a “loophole.” This special designation adds to the absurdity of Nvidia’s laudable but complicated position in the international market. To this end, Nvidia have recently announced $5.5 billion in estimated costs from canceled orders for the H20 chip. This comes after the recent shift in export policies.
The U.S. government is not merely asking companies like Nvidia to follow export laws closely—it is mandating that they do so. In a statement, a representative from Nvidia emphasized their commitment to compliance:
“The U.S. government instructs American businesses on what they can sell and where — we follow the government’s directions to the letter.” – Nvidia representative
Nvidia’s export practices have come under fire lately. The U.S. government is looking into whether shipments of restricted chips to China possibly transited through Singapore. Reports indicate that Nvidia’s revenue from Singapore often includes sales with billing addresses linked to subsidiaries of U.S. customers rather than direct exports to China.
The company asserts that its operations contribute positively to national security and the economy, claiming:
“NVIDIA protects and enhances national security by creating U.S. jobs and infrastructure, promoting U.S. technology leadership, bringing billions of dollars of tax revenue to the U.S. treasury, and alleviating the massive U.S. trade deficit.” – Nvidia
Nvidia is under increased pressure about its sales practices. The company maintains that its technology exports support well-known companies globally and states:
“The technology industry supports America when it exports to well-known companies worldwide – if the government felt otherwise, it would instruct us.” – Nvidia