Under the new rules, these chips will have to be tested by an outside lab to check their AI performance before being exported to China. Chinese buyers cannot receive more than half of the total amount of chips sold to American customers.
Nvidia needs to prove that it has enough H200 chips available in the US. Chinese companies buying these chips will have to prove that they have appropriate security measures in place and promise not to use them for military purposes. these requirements It didn’t exist before.
President Donald Trump said last month that he would allow the sale of chips if the U.S. government received a 25% commission. Critics from both parties attacked the plan, saying the chips could strengthen Beijing’s military and undermine America’s lead in artificial intelligence technology.
Jay Goldberg, a stock analyst at Seaport Research, said the export restrictions are an interim solution that would impose some restrictions on Nvidia’s sales to China, but could be difficult to properly monitor.
“As we’ve seen, companies are finding ways to access these chips, and the U.S. government appears to be taking a very transactional approach to chip exports,” Goldberg explained. “In other words, this appears to be a Band-Aid, a temporary attempt to bridge a wide gap among U.S. government export policymakers.”
China’s huge demand exceeds supply
Chinese technology companies are already Ordered over 2 million H200 chipsaccording to last month’s report, priced at around $27,000 each. This number is much higher than Nvidia’s current inventory of 700,000 chips.
At the Consumer Electronics Show in Las Vegas last week, Nvidia CEO Jensen Huang told reporters that the company is ramping up production of its H200 chips. He said rental prices for H200 chips, which are already running in cloud computing centers, are rising due to strong demand from China and other countries.
Saif Khan, who served as director of technology and national security at the White House National Security Council under President Joe Biden, warned that the new rules would give a major boost to China’s AI programs.
“This rule would allow approximately 2 million advanced AI chips like the H200 to be exported to China, which is equivalent to the amount of computing that a typical U.S. frontier AI company has today,” Khan said. “The administration will also face the challenge of enforcing the rule’s customer awareness requirements that limit support for unauthorized use by Chinese cloud providers.”
Policy change from the Biden era
These concerns led the Biden administration to Block sales of advanced AI chips to China Completely. But the Trump administration, led by White House AI Director David Sachs, believes selling advanced AI chips to China will deter Chinese rivals like heavily penalized Huawei from working harder to match Nvidia and AMD’s top chip designs.
When President Trump announced the sale last month, he promised to ship it to China “under conditions that continue to enable strong national security.”
Questions remain as to whether the administration will actually impose any restrictions on chip shipments or whether the Chinese government will allow them to be sold within China. Given that there has been $160 million worth of smuggling operations in the past, there are many challenges to cracking down on. Last month, there were reports that the US had begun discussions that could lead to the first chip shipments to China.
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