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As the U.S.– China tech rivalry continues, the Trump administration is signaling it's okay with Nvidia doing limited business with Beijing just not with its top-tier AI chips.
Speaking on CNBC Tuesday, Commerce Secretary Howard Lutnick clarified that the U.S. government is fine with Nvidia selling lower-grade chips to China specifically, the company’s H20 model, which was intentionally designed to be less powerful than its premier products.
“We don't sell them our best stuff, not our second-best, not even our third-best,” Lutnick said. “I think fourth-best is where we've come out that we're cool.”
Nvidia’s H20 Gets Green Light
The remarks followed Nvidia's announcement that it had received approval to resume selling the H20 chip in China. The chipmaker created the H20 as a workaround to comply with U.S. export restrictions, which prevent the sale of high-performance AI chips to Chinese companies.
The news boosted investor confidence, sending Nvidia shares higher. The company recently became the world’s most valuable firm, surpassing a staggering $4 trillion market cap.
Despite being less powerful than Nvidia’s Blackwell and Hopper chips, the H20 is still a hot commodity for China’s AI developers and its return to market helps Nvidia avoid steep losses. Before the approval, Nvidia reported $8 billion worth of orders that were stuck due to restrictions.
Staying One Step Ahead
Lutnick emphasized that allowing China access to downgraded chips keeps U.S. technology competitive while discouraging China from building its own AI infrastructure entirely from scratch.
“The Chinese are more than capable of building their own,” he said. “So you want to keep one step ahead of what they can build so they keep buying our chips.”
He explained the strategy is to give China just enough to remain dependent on American tech while denying them access to cutting-edge hardware.
“You want to sell the Chinese enough that their developers get addicted to the American technology stack,” Lutnick said. “That’s the thinking. Donald Trump is on it.”
Strategic Dependency
The Biden administration took a similar stance during its term, limiting chip sales to China but avoiding a complete cutoff. Now, Trump’s White House is signaling continuity with that approach maintaining a balance between economic opportunity and national security.
Nvidia CEO Jensen Huang reportedly met with Trump last week to discuss the future of AI chip exports. While Huang has publicly pushed for access to the Chinese market, he's also committed to keeping Nvidia at the forefront of chip development.
Nvidia’s roadmap already includes the rollout of Blackwell Ultra and a next-generation superchip named “Vera Rubin,” suggesting that even as China receives limited tech, the U.S. is racing further ahead.
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