Trump Open to Nvidia Selling Blackwell AI Chip to China
Nvidia Secures China Chip Exports with Revenue-Sharing Deal, Raising Questions About US strategy
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nvidia has reportedly reached an agreement with the U.S. goverment to resume chip exports to China, but with a important caveat: the company will share 15% of the revenue generated from these sales. This deal, brokered with former President Trump, marks a shift in Washington’s strategy to control advanced technology exports to Beijing and sparks debate about the long-term implications for both U.S. competitiveness and China’s AI ambitions.
The Deal: A 15% Cut for the US Government
The agreement allows Nvidia to export chips to China, albeit with a financial commitment to the U.S. government.Initially,Trump reportedly sought a 20% cut,but Nvidia CEO Jensen Huang successfully negotiated the percentage down to 15%. This revenue-sharing model is unprecedented and raises questions about the precedent it sets for future technology exports.
The immediate catalyst for the deal appears to be the potential approval of downgraded versions of Nvidia’s Blackwell chips for export. Paul Triolo, partner and senior vice president for china at advisory firm DGA-Albright Stonebridge Group, believes this approval “would be a big deal going forward.”
A Strategy of “Addiction” to Substandard Tech?
Triolo suggests a key element of the U.S. strategy is to “addict China to substandard, or non-cutting edge technology.” by providing access to less powerful chips, the U.S. aims to slow the advancement of China’s AI capabilities while maintaining a foothold in the massive Chinese market.
This approach contrasts with previous,stricter export controls. In 2022, Nvidia was blocked from exporting its A100 and H100 chips – crucial for training large AI models - to China.Further restrictions followed in 2023, encompassing additional Nvidia semiconductors. Chinese firms responded by aggressively stockpiling these chips, which are still being used to train AI models today.
Nvidia’s Viewpoint: Maintaining dependence
Nvidia CEO Jensen Huang has consistently argued that cutting off china from American chips would only accelerate the development of domestic alternatives. He believes U.S. companies should continue selling chips in China to ensure Chinese firms remain reliant on American technology as they develop their AI infrastructure.
Huang’s argument highlights the delicate balance between national security concerns and the economic realities of the global semiconductor market. Completely isolating China risks fostering self-sufficiency and perhaps diminishing the influence of U.S. companies.
Huawei’s Ascent and the Future of AI in China
While the Nvidia deal provides a short-term solution, China is actively pursuing alternatives. Huawei is rapidly developing its Ascend series of processors, aiming to compete directly with Nvidia.
Currently,Huawei’s processors aren’t yet on par with Nvidia’s offerings. Triolo notes that Chinese firms are “running out of those stockpiles of earlier acquired Nvidia GPUs and hoping that Huawei’s new Ascend series of processors will be capable of replacing those but they are not quite capable of doing that yet.” Though, he predicts that Huawei will release a more competitive 910 processor “probably next year.”
The situation represents a critical transition point. The effectiveness of the U.S. strategy hinges on whether downgraded Nvidia chips can maintain China’s dependence long enough for Huawei and other domestic firms to close the technology gap. The revenue-sharing agreement with Nvidia is a calculated gamble, aiming to balance economic interests with national security concerns in the rapidly evolving landscape of artificial intelligence.