By Karen Freifeld and Alexandra Alper
Dec 9 (Reuters) – China hardliners in Washington slammed the Trump administration for its decision to allow Nvidia to ship its second most advanced AI chip to China, citing concerns Beijing could harness the technology to supercharge its military.
President Donald Trump announced the move to allow H200 sales to China in a social media post on Monday, adding that the U.S. would collect a 25% fee on such sales, and that AMD and Intel would get approval to sell similar chips there.
The decision “puts our competitive edge up for sale, all for a 25% cut of chip exports,” said Brad Carson, a former Under Secretary of the Army. “When China starts supplying their military with AI built on U.S. chips, the world will regret this decision.”
The move is the most dramatic example yet of Trump’s new push towards relaxing restrictions on sales of advanced American AI technology to China, as he seeks expanded overseas markets for U.S. companies and as he faces Beijing’s imposition of export controls on rare earth minerals, key ingredients for manufacturing a vast array of technology in the U.S. and abroad.
It also marks a dramatic reversal from his first term, when Trump drew international attention by cracking down on Chinese access to U.S. technology, citing claims Beijing steals American intellectual property and harnesses commercially obtained technology to bolster its military, which Beijing denies.
But the administration, led by White House AI czar David Sacks, now argues that shipping advanced AI chips to China discourages Chinese competitors like Huawei [HWT.UL] from redoubling efforts to catch up with Nvidia and AMD’s most advanced chip designs.
If, in five years, AI chips made by sanctioned Chinese telecoms equipment giant Huawei were everywhere, “that means we lost … We can’t let that happen,” he said at an event in January.
But many in Washington disagree. Stewart Baker, a former Homeland Security and National Security Agency official, said the notion that the U.S. can keep China dependent on U.S. chips by letting them have the H200 is “a delusion.”
“There’s no world in which they are not going to continue to press as hard as possible to have a domestic industry that will ultimately have as its goal the bankruptcy of Nvidia and the dependence of the United States on Chinese AI,” Baker said.
Saif Khan, who served as director of Technology and National Security at the White House National Security Council under former President Joe Biden, echoed the remarks. Allowing H200 sales to China “could significantly erode America’s advantages (in AI) and supercharge China’s military modernization.”
But some China hawks see the impact as more limited, including James Mulvenon, a Chinese linguist and military expert who authored a report that helped convince the first Trump administration to sanction Chinese chip manufacturer SMIC in 2020.
“Regardless of this decision, the Chinese government has made it clear that it is not their long-term strategic goal to be dependent on Nvidia or any other Western technology, so these gains will likely be transitory,” he said.
(Reporting by Alexandra Alper. additional reporting by Michael Martina in Washington. Editing by Chris Sanders, Chizu Nomiyama and Mark Potter)
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