Commerce Dept. Backlog Stalls Nvidia H20 AI Chip Licenses

Despite an earlier signal from U.S. Secretary of Commerce Howard Lutnick in July, indicating that certain AI chips could once again be sold to China, the Commerce Department is reportedly holding up the necessary licensing for Nvidia’s H20 AI chips.

According to a report by Reuters, Nvidia, a leading developer of advanced semiconductors crucial for artificial intelligence, has yet to receive the official licenses required to export its H20 AI chips to the Chinese market. This delay comes after Secretary Lutnick’s public statement that had offered a potential path for U.S. chipmakers to resume sales of specific AI products to China, following a period of stringent export controls.

The primary reason for this bottleneck, as detailed by Reuters, is attributed to a significant backlog of licensing applications within the U.S. Department of Commerce. This administrative slowdown is reportedly exacerbated by internal turmoil, including a notable loss of staff and a breakdown in communication channels between the department and the very industry it oversees. Such internal issues are creating hurdles for companies seeking export approvals, even for products that may have previously received preliminary clearance.

Adding another layer of complexity to the situation, this ongoing holdup coincides with growing pressure from national security experts. These experts are reportedly urging the Trump administration to impose more restrictive measures, specifically advocating for a complete prohibition on Nvidia’s H20 AI chip sales to China. Their concerns are rooted in national security grounds, underscoring the delicate balance the U.S. government seeks to strike between supporting American industry and safeguarding strategic technological advantages. The confluence of internal bureaucratic challenges and external policy pressures is effectively stalling the deployment of these key AI components, creating uncertainty for both chipmakers and international trade relations.