China could receive the first shipments of Nvidia’s second-most powerful AI chips, signalling a shift in America’s long-standing restrictions on exports to Beijing.The US government has began a formal licensing process that could pave the way for chip gaint’s Beijing entry, Reuters reported, citing five people familiar with the matter. This comes after US President Donald Trump recently committed to permit sales. Earlier this month, Trump said that his administration would allow Nvidia to sell its H200 chips to China, with the US collecting a 25% fee on the transactions. Explaining the rational behind the permission, he said that exporting American chips would help US companies retain an edge over Chinese chipmakers by reducing the appetite for dragon’s chips.However, despite the announcement, uncertainty still surrounds the pace of approvals and whether Chinese authorities would permit local firms to purchase the chips. The move has also drawn sharp criticism from China hawks across the US political spectrum, who argue that the technology could enhance Beijing’s military capabilities and weaken the US lead in artificial intelligence, Reuters reported. According to the sources, the commerce department has forwarded licence applications related to the proposed chip exports to the state, energy and defense departments as part of a mandatory inter-agency review. Under US export regulations, the departments have 30 days to submit their assessments. One administration official stressed that the process would be comprehensive, saying it was “not some perfunctory box we are checking.” However, the regulations, the final green signal still remains with the president.While the White House declined to comment directly on the review, a spokesperson said “the Trump administration is committed to ensuring the dominance of the American tech stack – without compromising on national security.” The potential policy is a transition from the approach taken under former president Joe Biden, whose administration imposed extensive restrictions on exports of advanced AI chips to China and other countries it saw as possible transit points for smuggling, citing national security concerns. It also contrasts sharply with Trump’s stance during his first term, when he moved aggressively to restrict China’s access to US technology. At the time, Trump pointed to allegations that China steals American intellectual property and uses commercially obtained technology to strengthen its military, accusations that Beijing has denied.
‘A mistake’ — Why officials are not happy?
Former national security officals have firmly opposed the move saying that large chip outflows to China would be ‘a significant strategic mistake,’” said Chris McGuire, who served on the White House National Security Council under President Joe Biden and is now a senior fellow at the Council on Foreign Relations. He told Reuters that the chips are “the one thing holding China back in AI.” “I cannot possibly fathom how the departments of Commerce, State, Energy, and Defense could certify that exporting these chips to China is in the U.S. national security interest,” he added. Officials backing the policy within the Trump administration argue the exports could have the opposite effect. Led by White House AI czar David Sacks, they say selling advanced chips to China would discourage domestic firms such as Huawei from intensifying efforts to close the gap with Nvidia and AMD’s most advanced designs. Reuters reported last week that Nvidia is considering ramping up production of the H200 chips, which sit just below its flagship Blackwell processors, after initial orders from China exceeded existing manufacturing capacity. Although the H200 is slower than the Blackwell chips across many AI applications, it remains widely used and has never previously been approved for sale in China. Trump had earlier indicated that he was open to allowing exports of a less advanced version of Nvidia’s Blackwell chips, but later reversed that position and moved instead to approve potential sales of the H200.
