On Monday, President Trump announced his latest deal that expands the federal government’s role in a private company, posting on Truth Social that “the United States will allow NVIDIA to ship its H200 products to approved customers in China, and other Countries, under conditions that allow for continued strong National Security.”
Trump posted, “$25% [sic] will be paid to the United States of America”; White House staff clarified that 25 percent of the sales revenue will be paid to the U.S. Treasury.
China gets more advanced chips, Nvidia gets more sales, and the U.S. government gets a cut of the revenue.
But this all skips over the question of why the U.S. government would want the Chinese to get access to more advanced chips.
Released in March 2024, the H200 is Nvidia’s best AI chip from the previous “Hopper” generation; the current generation is the Blackwell generation. When the Biden administration barred the sale of powerful chips to China, Nvidia shifted to creating less powerful chips for the Chinese market, like the H20, but the Chinese government discouraged local companies from buying the H20s.
The tech-oriented think tank the Institute for Progress concluded that with this move, “China would have access to chips that outperform any chip its companies can domestically produce, and at much higher quantities”; “Chinese AI labs would be able to build AI supercomputers that achieve performance similar to top US AI supercomputers”; and “exporting Hopper chips would significantly erode America’s expected AI compute advantage over China.”
That all sounds ominous, and all over Capitol Hill, Republicans are wary at best about the move.
The U.S. House Select Committee on China warned, “The H200s are far better than what China can produce domestically, both in capability and scale. . . . Publicly available analysis indicates that the H200 provides 32% more processing power and 50% more memory bandwidth than China’s best chip. The CCP will use these highly advanced chips to strengthen its military capabilities and totalitarian surveillance. Finally, Nvidia should be under no illusions — China will rip off its technology, mass produce it themselves and seek to end Nvidia as a competitor. That is China’s playbook and it is using it in every critical industry.”
Missouri GOP Senator Josh Hawley, usually a stalwart supporter of the president, expressed skepticism.
The famous line often attributed to Vladimir Lenin is that the capitalists would sell the communists the rope that would later be used to hang them. In this case, the U.S. government is apparently thrilled to get 25 percent of the sales of the chips that China might use to beat us in the AI race.