By Jarrett Renshaw and Karen Freifeld
WASHINGTON/BEIJING/HONG KONG, July 15 (Reuters)
There was a pause between the U.S. and China when it came to the Nvidia chip export, and one of the reasons was some insecurities about the whole collaboration. However, there seems to be more security now and a resumption of partnership. Technology holds almost all parts of our lives now, and this is because of the meetings, discussions, and agreements that transpire behind the scenes or closed doors. We are just there to see and feel it all manifest. In this case, we are talking about imports and exports that happen for the benefit of technological growth.
China and the U.S. are signing documents to resume sales
Nvidia’s NVDA.O planned resumption of sales of its H20 AI chips to China is part of U.S. negotiations on rare earths, Commerce Secretary Howard Lutnick said on Tuesday, and comes days after its CEO met President Donald Trump. Nvidia said late on Monday that it is filing applications with the U.S. government to resume sales to China of its H20 graphics processing unit and has been assured by the U.S. that it will get the licenses soon.
Lutnick told Reuters, referring to an agreement Trump made to restart rare earth shipments to U.S. manufacturers. He did not provide additional details and said,
“We put that in the trade deal with the magnets.”
The planned resumption is a reversal of an export restriction imposed in April that is designed to keep the most advanced AI chips out of Chinese hands over national security concerns, an issue that has found rare bipartisan support. It drew swift questions and criticism from U.S. legislators on Tuesday. Raja Krishnamoorthi, ranking member of the House of Representatives Select Committee on China, said in a statement, the decision
“would not only hand our foreign adversaries our most advanced technologies but is also dangerously inconsistent with this Administration’s previously stated position on export controls for China,”
There is hope for the chips, but Trump’s restriction is making it a little hard
Republican John Moolenaar, chair of that committee, said in a statement he would seek “clarification” from the Commerce Department. Shares of Nvidia, the world’s most valuable firm, closed up 4% and were nearly unchanged in after-market trading. Nvidia’s plan to resume sales has set off a scramble at Chinese firms to buy H20 chips, two sources told Reuters.
The chips that Nvidia will resume selling are the best it can legally offer in China, but lack much of the computing power of the versions for sale outside of China because of previous restrictions put in place by Trump’s first administration and then President Joe Biden’s administration. But critically, H2O chips work with Nvidia’s software tools, which have become a de facto standard in the global AI industry.
Rare earth materials are vital for both China and America
Electric car batteries and wind turbines are examples of green energy technology that powers them. They are essential for defense systems, medical devices, and sophisticated electronics. China has significant influence in any trade negotiations because it controls a large portion of the world’s rare earth production and processing.
If relations deteriorate once more in the future, the United States wants to ensure that its supply chain is secure. China generated $17 billion in revenue for Nvidia in the fiscal year ending January 26, or 13% of total sales, based on its latest annual report. Internet giants ByteDance and Tencent (0700). HK is also in the process of submitting applications for H20 chips, the sources familiar with the matter said. Central to the process is an approved list put together by Nvidia for Chinese companies to register for potential purchases, one of the sources said.