US House China panel faults Trump's move to ease Nvidia AI chip sales

Business Times

18-07-2025

[WASHINGTON] The Trump administration's decision allowing Nvidia to resume shipments of its H20 artificial intelligence chips to China risks bolstering Beijing's military capabilities and expanding its capacity to compete with the US in AI, according to the head of the US House Select Committee on China.
'The H20, which is a cost-effective and powerful AI inference chip, far surpasses China's indigenous capability and would therefore provide a substantial increase to China's AI development,' chairman John Moolenaar, a Michigan Republican, said on Friday (Jul 18) in a letter to Commerce Secretary Howard Lutnick, whose agency oversees semiconductor export controls. 'We must not allow US companies to sell these vital artificial intelligence assets to Chinese entities.'
Moolenaar's letter follows indications from the US that it will allow certain types of AI processors from Nvidia and rival Advanced Micro Devices back into China after restricting sales of those less-advanced components in April. Lutnick and other officials justified the step by saying Chinese companies could already get parts that are equivalent to or better than Nvidia's H20 – a scaled-down accelerator designed to abide by earlier US restrictions on leading-edge chips.
Washington has yet to formally approve any H20 shipments, Nvidia chief executive officer Jensen Huang said on Wednesday, but the company expects those licences soon. It is still unclear what volume of sales the US plans to allow. Some Trump officials have privately protested the decision to permit any such exports, Bloomberg has reported.
Moolenaar requested a briefing from the Commerce Department by Aug 8 to explain the rationale for the policy change. He also sought clarity on how the US will issue licences for the H20 and how many chips will ultimately be cleared for shipment to China.
'Approving the sale of large volumes of H20s could give China the compute power it needs to develop powerful AI models that are open to users free of charge as DeepSeek has done with R1,' Moolenaar said. 'As China has done in so many other industries, this is a deliberate strategy to capture market share and become the global standard.'
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The Commerce Department did not immediately respond to requests for comment, while Nvidia declined to comment.
Officials including Treasury Secretary Scott Bessent have cast the policy shift on the H20 as part of an effort to secure access to rare-Earth minerals from China, a core US aim in ongoing trade negotiations, despite earlier assertions that allowing H20 exports was not up for discussion in those talks.
China's Commerce Ministry said on Friday the US should abandon its 'zero-sum mindset' and scrap its 'unjustified' trade restrictions when commenting on Washington lifting the H20 chips ban. The ministry also suggested that the chip ban wasn't included in the recent negotiations.
Bessent and Lutnick have also argued that Washington should keep China's AI development dependant on a US ecosystem, depriving Shenzhen-based Huawei Technologies of the revenue and know-how that would come from a wider customer base in its home market. 'You want to sell the Chinese enough that their developers get addicted to the American technology stack,' Lutnick said on Tuesday on CNBC.
The US effectively banned sales of advanced chips to China in 2022 and has several times tightened those controls, which also cover chip manufacturing equipment and target specific Chinese companies. Nvidia is still not allowed to ship to China its most advanced AI processors, which account for some 90 per cent of the market for that hardware.
The H20 is widely sought after in China, in large part due to its memory bandwidth, which makes it particularly good for inference: the point at which AI models recognise patterns and draw conclusions. BLOOMBERG