Donald Trump is Helping China in the AI Race. Why?
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Nvidia has ordered 300,000 new top-line computer chips from the Taiwan Semiconductor Manufacturing Company (TSMC) following a huge boost in demand from China.
The agreement over the H20 chipsets, which are some of the most advanced technology being produced in Taiwan's industry-leading factories, comes in the same month that Trump reversed a ban that stopped Nvidia from selling to China over security concerns.
Newsweek contacted the Chinese Embassy and the White House for comment on this story via email.
Why It Matters
The January launch of DeepSeek, a Chinese-made AI model, , sparked what may have called a "cold war" over artificial intelligence development. Researchers developed DeepSeek with a fraction of the resources but managed to produce an AI capable of rivaling ChatGPT.
In April, the Trump administration barred top U.S. suppliers, like Nvidia, from selling topline silicon to China over "national security concerns." The ban mirrored the 2022 CHIPS Act passed by former President Joe Biden, which increased semiconductor manufacturing in the U.S. while also clamping down on chip companies investing in China and Russia, the biggest competitors in the industry.
What To Know
The White House reversed its ban after barely three months, giving Nvidia the all-clear in July to resume sales with China. Nvidia founder and CEO Jensen Huang on July 14 said the U.S. government had assured him it would restore the licenses to sell H20s in China.
"General-purpose, open-source research and foundation models are the backbone of AI innovation," Huang said. "We believe that every civil model should run best on the U.S. technology stack, encouraging nations worldwide to choose America."
Half a month later, and Chinese demand for Nvidia chips has surged, with the U.S. company looking to replenish its stock with an order of 300,000 H20 chipsets from TSMC, one of the largest manufacturers in the world.
US President Donald Trump shakes hand with China's President Xi Jinping at the end of a press conference at the Great Hall of the People in Beijing on November 9, 2017.
US President Donald Trump shakes hand with China's President Xi Jinping at the end of a press conference at the Great Hall of the People in Beijing on November 9, 2017.
Getty Images
The return of Nvidia chips to the Chinese market will be a boon to the country's rapidly expanding AI industry, but there's concern that the U.S. could fall behind in an AI "race", as OpenAI CEO Sam Altman describes it, using U.S. chips to do so.
In May, a report from the Georgetown University's Center for Security and Emerging Technology shared with Newsweek found that two of China's leading AI institutes, headquartered in Beijing, have established branches in Wuhan to cooperate on sophisticated alternatives to the large generative AI models.
The report described the new labs' aim to "springboard to artificial general intelligence", overtaking the U.S. by focusing on other forms of AI as opposed to the western focus on large statistical models.
What People Are Saying
Alexandra Mousavizadeh, CEO of Evident and creator of the Global AI Index, told Newsweek that there were two different approaches to China's AI development: "You can continue to try and contain access to chips and close the walls off. While you're doing that, you're doubling down on investment into data infrastructure, supporting the development of AI in the U.S. and being first in that race,
"Or you open up completely and you say, 'Look, it's to the benefit of all that everyone has access to everything, because the collaboration between Europe, the U.S. and China in the past has been what has led to the ability to get to where we are today.'
A spokesperson for the Chinese Embassy told Newsweek: "China has consistently advocated that the development of artificial intelligence should adhere to principles that are human-centered and promote benevolence.
"China believes that AI development should be fair and inclusive, ensuring that all countries equally enjoy the benefits brought by AI, and has no intention of seeking dominance in this field."
What Happens Next
China will continue to be able to purchase from Nvidia and other U.S. chip manufacturers unless the White House alters its policy.
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A spokesperson from the EPA said Congress never explicitly gave EPA authority to impose greenhouse gas regulations for cars and trucks and that the agency's proposal to revoke the endangerment finding "does not prohibit vehicle manufacturers from developing EVs or different vehicles." Focus on consumer demand Experts say that even amid a shifting regulatory landscape, consumer preference will continue to drive auto makers' decisions. "Their focus is going to be on making vehicles more affordable and dealing with the fact that consumers, not the government, are standing in the way of the mass adoption for EVs," Patrick Anderson, founder of Michigan-based consulting firm Anderson Economic Group. The rate of electric vehicle adoption has been steady over the last several years, although the majority of Americans still fuel their cars at the pump. Demand for the vehicles has waned over the last year, according to data on light vehicle registration from S&P Global Mobility. From January to May, the electric vehicle market share was 7.3%, compared with 8% for the entire year of 2024, data from the auto intelligence provider shows. But while consumer demand may have stalled slightly over the past year, auto makers will still want to offer low-emissions products in order to stay competitive both at home and abroad, Ivan Drury, director of insights at online car marketplace Edmunds, told CBS MoneyWatch. "Every auto maker is a global competitor, and even though they might not be selling as well here, they could sell elsewhere better," he said. Impact would take time Experts say the proposal, if passed, wouldn't drastically change any near-term plans of auto makers, given the time and money they have already invested in their product lines. "If had already planned to build X number of this kind of vehicle, you can change that, but not necessarily tomorrow," said Brinley. "So that's gonna have to be planned out." Product development cycles at car manufacturers span five to 10 years, according to a report from Eurasia Group, a global research firm. The exact strategy and speed with which companies make changes would vary from auto maker to auto maker, according to experts. "For now, auto makers would enjoy the flexibility and lower costs from less stringent emissions limits, particularly in their nonelectric fleet planning," the report from Eurasia says. There are concerns among some companies that the EPA's proposal, if passed, would inject a degree of chaos into industry, David Victor, a professor at University of California San Diego, told CBS MoneyWatch. Also, the rule-making process will likely be challenged in the courts, he said. "[Auto makers] will not get a reliable new set of rules anytime soon," said Victor. The EPA is holding a virtual public hearing on the proposed rule on Aug. 19-20, with a public comment period open through Sept. 15. 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