U.S. Government to Lift Ban on Nvidia AI Chip Sales to China

What Happened?

Nvidia CEO Jensen Huang announced this week his company is filing applications with the U.S. government to sell AI chips to China, and that he hopes to start deliveries soon. According to Nvidia, the U.S. government has given assurances the ban on selling AI chips to China will be lifted soon so the sales can go through.

The announcement followed a visit by Mr. Huang to Washington D.C., where he met with President Trump and several members of Congress. During those meetings, Mr. Huang repeatedly gave assurances that Nvidia wants to help strengthen the U.S. economy and create jobs for American workers.

Why it Matters

Nvidia’s H20 chip is a less powerful version of the company’s H100, which is considered its main AI chip. The H20 was specifically designed to comply with U.S. export restrictions on sending advanced AI technology to China. In response, a number of firms in China immediately expressed interest in making purchases of the H20 chip. Nvidia’s stock value increased by about 5% following the announcement.

Nvidia recently became the first privately owned company in the world with a total market cap in excess of four trillion dollars. Sales for the H20 chip in China would be worth an estimated $15 billion dollars annually for Nvidia. During a recent trip to Beijing, Mr. Huang said ‘The U.S. government has assured Nvidia that licenses will be granted, and Nvidia hopes to start deliveries soon.’

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Thus far the Trump Administration has neither confirmed nor denied plans to approve the sale of H20 chips to China. The concern is that the sale of advanced chips to China will allow the Chinese government to use American made technology to improve the capabilities of China’s military and intelligence services. 

On a blog post for Nvidia, Mr. Huang also made an extraordinary claim, saying that ‘the world has reached an inflection point — AI has become a fundamental resource, like energy, water and the internet.’ Such a claim could be seen as self-serving, since Nvidia provides key portions of the hardware required to make AI programs function.

Nvidia’s chips are considered the best at allowing AI programs to scour the internet and process enormous amounts of visual data and imagery, which is what makes most AI programs work.

AI has become more popular and is even poised to change the way billions of people use the internet. Because many people are using AI programs for web searches, traditional search engines, including Google, have seen a decrease in web traffic in the past year.

How it Affects You

If the U.S. government does approve the sale of Nvidia’s H20 chips to China, it will be another step towards the continued growth of AI on a global scale. Nvidia’s CEO indicated he believes the AI market in China is worth far more than the estimated $15 billion the sales of the H20 chip would bring. 

‘The Chinese market is massive, dynamic, and highly innovative, and it's also home to many AI researchers,’ Huang told Chinese state broadcaster CCTV on Tuesday.