United States Authorizes Sales of Less Sophisticated Chips by Nvidia to China
The U.S. administration has made a decision to allow the supply of Nvidia chips to Chinese entities, following a thorough examination of all factors. This reversal comes after an initial export ban in October 2023, imposed due to national security concerns.
President Trump and his team have approved the sale of certain lower-performance AI chips to China, under U.S. government licenses. However, exports of the most advanced GPUs, such as the A100 and H100, remain banned.
Nvidia, in compliance with these export restrictions, has redesigned certain chips, like the H20 and a slower RTX 4090 version (RTX 4090D), to meet U.S. export compliance rules. These chips are now allowed for sale, but under strict licensing conditions.
As part of the agreement to lift some export restrictions, Nvidia has agreed to pay a 15% share of sales revenue from chips exported to China back to the U.S. government. This arrangement has raised concerns about mixing national security with financial arrangements.
The U.S. Commerce Department has imposed indefinite license requirements on key chips like the H20, with Nvidia acknowledging significant financial impact due to these controls.
The U.S. government's approach is driven by concerns over national security and maintaining technological leadership. However, it has drawn criticism for potentially incentivizing China’s independent chip development efforts.
The U.S. is particularly concerned about Chinese entities using the purchased chips for military purposes or AI research. Washington aims to limit China's access to advanced American technologies, and does not want to allow China to establish a monopoly on its domestic market. The U.S. is concerned about China reaping monopoly profits and using them to outpace the U.S.
Recent reports suggest that Chinese military agencies, state AI research institutes, and universities have purchased small quantities of Nvidia chips banned for export to China over the past year. These purchases were discovered by Reuters in early 2024.
President Trump has emphasized that the decision to allow China to buy less advanced chips while keeping the best microchips for the U.S. is a wise one. Hassett, a senior advisor to Trump, reiterated that the U.S. does not want to allow China to establish a monopoly on its domestic market.
This regulatory framework reflects evolving U.S. efforts to manage technology transfers to China amid geopolitical and national security concerns.
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