Reversing Previous Restrictions, Washington Allows NVIDIA To Sell Advanced Chips to China

The Trump administration is giving China a much-needed boost in the race for artificial intelligence (AI). After a White House meeting between President Donald Trump and NVIDIA CEO Jensen Huang, the company announced on July 15 that it would resume sales of its H20 AI chips in China following an April ban.

While NVIDIA produces certain higher-end chips for the domestic market, giving China access to the H20 will allow it to rapidly integrate AI into its military while it continues to pursue self-sufficiency.

Commerce Department Allows NVIDIA, AMD To Resume Sales of Advanced Chips

While NVIDIA will still be required — on paper — to obtain export licenses from the Commerce Department to sell its H20 line to Chinese customers, the Trump administration has said they will be granted automatically. Though not quite as powerful as NVIDIA’s newer chips, the H20 remains essential for AI deployment due to its memory capabilities that outclass the firm’s previously export-compliant H100 line. NVIDIA also reported that it would be introducing a new chip based on its leading Blackwell design specifically for the Chinese market and geared toward integrating AI into the industrial manufacturing sector.

Following the announcement, American semiconductor firm Advanced Micro Devices (AMD) unveiled plans to resume sales of its leading AI chips in China, which were also blocked in April. As with NVIDIA, AMD’s chips have become essential inputs for training advanced AI models.

China Remains Reliant on U.S. Semiconductors Despite Self-Sufficiency Push

Despite Beijing pouring significant subsidies into its domestic semiconductor industry, China cannot produce chips capable of training leading AI models, leaving Chinese firms reliant on American suppliers. This reliance has led to significant computing shortages. Even DeepSeek, a leading Chinese AI developer, has publicly stated that its models’ power remains constrained due to American export controls on advanced AI chips.

This shortfall has also directly affected Beijing’s efforts to modernize the People’s Liberation Army (PLA). China has pushed the PLA to adopt the concept of “intelligentized warfare”— integration of AI into command and control as well as major weapons systems — but PLA units have chosen not to purchase Chinese-manufactured chips due to their lower performance. As a result, China’s military remains highly reliant on imports of advanced American semiconductors. It has purchased chips designed by NVIDIA, Intel, and Xilinx, which is now owned by AMD.

The U.S. Should Reassert and Strengthen Export Controls

It is a mistake to allow NVIDIA to resume the sale of H20 chips in China. It will offer short-term aid to the most promising aspect of Beijing’s technology sector while giving Chinese firms time to reduce their dependence on imports. The push for domestic chip development has only gained momentum over the past several years.

Rather than give China relief from export restrictions, Washington should tighten its control on the flow of advanced semiconductors. The Commerce Department should increase enforcement efforts while maintaining restrictions on the sale of semiconductor design software and manufacturing equipment. This should be paired with Congressional action on screening outbound investment to prevent American capital from fueling China’s technology sector.

Jack Burnham is a research analyst in the China Program at the Foundation for Defense of Democracies (FDD), where Miles Kershner is an intern. For more analysis from the authors and FDD, please subscribe HERE. Follow Jack on X @JackBurnham802. Follow FDD on X @FDD. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.