China seeks US chip control ease for trade deal; AI advantage warned
The global technology landscape remains a battleground of strategic interests, as China presses the United States to loosen its stringent export controls on critical artificial intelligence (AI) chips. This demand forms a pivotal component of ongoing trade negotiations, potentially paving the way for a high-stakes summit between US President Donald Trump and Chinese President Xi Jinping. However, experts on both sides of the Pacific are sounding alarms, cautioning that any significant relaxation of these restrictions could hand Beijing a decisive competitive edge in the rapidly evolving field of AI, with profound implications for national security. [Summary, 2, 5, 13, 24]
In a notable development reflecting the intricate dance of diplomacy and commerce, the US Commerce Department recently began issuing licenses for Nvidia to export its H20 chips to China, reversing an earlier ban. This shift followed direct appeals and meetings between Nvidia CEO Jensen Huang and President Trump, underscoring the powerful lobbying efforts of major tech firms facing substantial revenue losses from the Chinese market. The H20 chip, specifically engineered to comply with previous Biden-era export rules, is a less powerful variant compared to Nvidia’s top-tier H100 and H200 models, which remain under strict embargo. This move is being interpreted as a nuanced approach by Washington to balance economic imperatives with national security concerns, allowing some commercial flow while attempting to choke off China’s access to the most advanced technologies. Similarly, the US has also lifted export license requirements for chip design software (EDA) sales to China, a concession linked to Beijing’s commitment to expedite rare earth export approvals.
Despite these selective relaxations, the Trump administration has affirmed its intent to maintain tight controls on the “highest-end” semiconductors and the sophisticated manufacturing equipment essential for their production. Senior White House officials emphasize that the most cutting-edge chip technology, particularly involving advanced lithography machines, will continue to be export-controlled to prevent its flow into China. This stance is reinforced by a broader US strategy that has seen President Trump announce plans for a sweeping 100% tariff on foreign computer chips, with exemptions primarily for companies establishing production facilities within the United States, aiming to bolster domestic manufacturing.
Security analysts, however, remain deeply skeptical of any concessions. A collective of 20 experts, including former high-ranking national security officials, explicitly urged the Commerce Department to block the H20 sales, branding it a “strategic misstep that endangers the United States’ economic and military edge in artificial intelligence.” They highlight ongoing concerns that US-manufactured semiconductors are still finding their way into Russian military equipment and that China is adept at circumventing existing controls to accelerate its AI research and development for military applications. Calls for a “Chip Security Act” in Congress are gaining traction, proposing mandatory tracking mechanisms on advanced chip exports to prevent diversion.
For its part, China has vociferously condemned US export controls as “unilateral bullying and protectionism,” asserting that such measures undermine the stability of global semiconductor supply chains. Beijing’s recent investigation into Nvidia’s H20 GPUs, following the lifting of their export ban, is widely seen as a retaliatory signal against proposed US tracking requirements. Chinese tech giants, including Huawei, are rapidly advancing their domestic chip offerings, with Nvidia itself acknowledging that US restrictions are inadvertently accelerating China’s independent innovation and boosting local competitors. Facing US protectionism, China is actively diversifying its trade partnerships, deepening economic ties with regions like ASEAN and Africa, and focusing on high-tech sectors such as AI and green energy cooperation. Domestically, cities like Shanghai are incentivizing technology research and development through substantial subsidies.
The intricate interplay of trade, technology, and national security continues to define the US-China relationship. While both nations seek to de-escalate tensions through tariff pauses and limited agreements, the core disagreement over advanced chip technology and its implications for AI dominance persists, shaping the contours of global commerce and geopolitical competition.