Inc. Magazine
Jensen Huang got Trump to lift the ban on Nvidia’s H20 AI chip sales to China, boosting Nvidia’s stock and possibly reshaping the global AI race. The move raised concerns in Washington over national security and political influence, as China’s DeepSeek may now rise faster, and election shifts could change the game again.
Nvidia’s Jensen Huang Just Got Trump to Reverse Course on AI Chips for China. Here’s What It Means
Author: Chris Morris
Jensen Huang pulled off something of a political miracle this week for Nvidia shareholders. As the U.S. and China continue to growl at one another over tariffs and other elements of the trade war between the two countries and the race to attain AI superiority, Huang convinced Donald Trump to lift the ban on select AI chip sales to China.
That has certainly given the company’s share price a boost. The stock has jumped nearly 6 percent since Nvidia announced sales of the H20 chip would resume. And the company’s market cap, which hit $4 trillion on July 9, is already up to nearly $4.2 trillion.
While resuming sales in China will certainly make the next Nvidia earnings announcement one to watch, Huang’s achievement could have a ripple effect in a number of other areas, including DeepSeek’s prominence on the AI stage, military use of AI—and the global battle for AI supremacy.
AI strategic advantages
Limitations on the sale of semiconductors to China began in 2023 with the Biden administration, but in April, the Trump administration announced it was banning sales of the H20 chip. The fear, at the time, was that while the chip wasn’t as powerful as those sold in other parts of the world, it was still capable of processing complex requests.
The U.S. currently leads the AI race, but China has been gaining ground quickly, with many banks and public universities in Europe, Asia, Africa, and the Middle East opting for Chinese-made large language models, rather than those from OpenAI or Perplexity. In part, that’s because the pricing is considerably lower. By reopening the flow of Nvidia chipsets, that could give Chinese AI researchers a boost—and the AI market is young enough that any player can still assume a dominant role.
Nvidia declined to comment to Inc. about any of the possible ripple effects of the resumption of chip sales.
The U.S.-China trade war
The rollback of the sales ban came as China agreed to renew rare earth sales to the U.S., raising questions about whether China won a face-off with Trump.
U.S. officials are playing that development down. Commerce Secretary Howard Lutnick told CNBC the reversal was indeed linked to the rare earths deal, but it also came because the chip was less powerful than the ones sold to U.S. companies. Government officials, said Lutnick, want China to be “addicted” to American technology.
Under Secretary Jeffrey Kessler, however, told congressional staffers last month that the chip was not part of the deal, according to The Washington Post, which only adds to the confusion.
The 2026/2028 elections
Huang has learned how to court Trump, which, with the addition of the rare earth deal, seemingly resulted in the ban’s being lifted. But many in Washington were caught off-guard by the announcement, with Senators Elizabeth Warren (D-Mass.) and Jim Banks (R-Ind.) expressing concerns in a letter to Huang sent on July 11.
The Republicans are firmly in control of Washington right now, but the midterm elections could shift the balance of power. And the 2028 presidential election is, at present, wide open. That could result in another ban and could cost Nvidia some political capital. Worst case, it could make the company a political talking point in the elections.
DeepSeek vs. OpenAI
China’s DeepSeek unleashed chaos in the AI world in January of this year with its claim that it was able to train its AI model at a much lower cost than GPT-4 and without access to Nvidia’s top-tier chips. Sam Altman, CEO of OpenAI, called the model “impressive” and said that it was “legit invigorating” to have a competitor.
With new access to chips, DeepSeek could become an even bigger competitive threat, says Rajiv Garg, a professor at Emory University’s Goizueta Business School.
“DeepSeek did an amazing job,” he says. “If they want to build a bigger, better model, they can now buy H20s to create a new data center. … With access to these chips, it can create even more powerful solutions for the world.”
China’s military and intelligence divisions
The fear that China could use advanced chips, like those from Nvidia, was a major factor in the Biden administration’s decision to restrict sales in 2023. Huang, in an interview with CNN’s Fareed Zakaria last weekend, dismissed those concerns, saying “We don’t have to worry about that, because the Chinese military, no different than the American military, won’t seek [a hostile country’s] technology out to be built on top of. They can’t rely on it. It can be limited at any time. Not to mention, there’s plenty of computing capacity in China already.”
Not everyone is so confident. In their letter to Huang, Warren and Banks wrote: “We are worried that your trip to [China] could legitimize companies that cooperate closely with the Chinese military or involve discussing exploitable gaps in U.S. export controls.”
A former Commerce Department official was more blunt in a discussion with the Washington Post, saying “It’s very hard to disentangle China’s AI ambitions for the commercial space from the military space.”
Garg, of the Goizueta Business School, says he’s skeptical as well: “I think it would be dumb if a country says, ‘I’m going to use this technology for consumer-facing things, but not to defend the country.’ [Huang’s comments] don’t make sense to me.”
Credits: TCA, LLC.