AI: US gives Nvidia green light to China sales. RTZ #931

A new deal to let Nvidia sell chips into China has been struck, for ‘A Piece of the Action’, as the famous 1968 Star Trek episode goes. And it may be a move backwards and forwards.

Nvidia has been on a secular roll with its product momentum globally DESPITE the geopolitical US/China tussles over US chip and other AI tech sales into China.

Founder/CEO Jensen Huang has been careful to note in recent public statements that the company was not including China sales into future revenue guidance for investors. And that seems to be shifting, giving Nvidia more momentum in this AI Tech Wave going into next year.

But there are some strings, as Axios lays it out in “Trump to allow certain Nvidia chip sales to China for 25% U.S. cut”:

“The Trump administration plans to lift a blockade on exports of Nvidia‘s H200 chips to China — and the U.S. government will get a 25% cut from future sales, the president said Monday.”

“Why it matters: Nvidia CEO Jensen Huang has been pressing the White House to allow the U.S. to export advanced chips to China, arguing that it’ll help the U.S. win the AI race.”

“Driving the news: Trump said on Truth Social that he’ll allow Nvidia to sell H200 chips — the generation of chips before its current, more-advanced Blackwell lineup — to China, with the U.S. government pocketing a quarter of the revenue.”

• “He said he would apply “the same approach to AMD, Intel, and other GREAT American Companies.”

We’ve seen this movie before. The sequel has bigger numbers for the take:

“State of play: It’s not dissimilar to a deal from earlier this year in which Nvidia and AMD agreed to give the U.S. 15% of the sales of its less-advanced H20 chip to China in exchange for export licenses.”

China hawks still have their concerns, however misplaced:

“Threat level: American defense hawks fear that China could use Nvidia chips to advance its military ambitions.”

• “Trump said Monday that the sales will be subject to “conditions that allow for continued strong National Security.”

• “The blockade remains in place for Nvidia’s current generation of Blackwell chips, which will be replaced in the second half of 2026 by even more advanced Rubin chips.”

• “Huang said recently he was unsure if China would want the older chips.”

“What they’re saying: “We applaud President Trump’s decision to allow America’s chip industry to compete to support high paying jobs and manufacturing in America,” Nvidia said in a statement. “Offering H200 to approved commercial customers, vetted by the Department of Commerce, strikes a thoughtful balance that is great for America.”

The WSJ has additional details on “How Trump’s U-Turn on Nvidia Chips Changes the Game for China’s AI” worth also reviewing:

“Hours after Justice Department announces smuggling case targeting Beijing, president lifts ban on sought-after AI hardware.”

That effort notwithstanding, the shift does allow China an opportunity to continue to fine-tune its AI strategy:

“Beijing recently discouraged Chinese companies from buying the H20, seeking to bolster domestic suppliers. Asked whether Chinese companies would be allowed to get the H200, a Chinese Foreign Ministry spokesman on Tuesday avoided a direct answer and said Beijing wanted “mutual benefit through cooperation” with Washington.”

There’s enough up front and behind the scenes in this complex shift for both the US and China governments.

While giving its leading companies in both countries the opportunity to accelerate their AI strategies in this AI Tech Wave. Despite the complicated strings attached. Stay tuned.

(NOTE: The discussions here are for information purposes only, and not meant as investment advice at any time. Thanks for joining us here)