On Tuesday, the Trump administration formally approved Nvidia Corporation (NVDA) to sell its H200 artificial intelligence chips to China. But this isn't exactly a free-for-all. The deal comes wrapped in enough regulatory red tape to make a customs inspector smile.
New Framework, New Guardrails
The approval lets Nvidia resume shipments of the H200, the company's second-most powerful AI processor, under a newly defined regulatory framework that's considerably tighter than what came before.
Here's how it works: Third-party testers must verify the chips' technical specifications. China cannot receive more than 50% of the number of H200 chips sold to American buyers. And Nvidia must certify that sufficient supplies remain available in the U.S. before any exports get the thumbs up.
But there's a twist. China has reportedly told select tech firms it will only approve H200 chip purchases in limited cases, such as for university research labs, according to investing.com on Tuesday, citing The Information. So even as the U.S. opens the door, Beijing seems to be keeping it only slightly ajar.
Security Reviews and No-Military Pledges
Chinese customers will need to demonstrate "sufficient security procedures" and formally promise that the chips won't be used for military purposes. These conditions represent a significant tightening compared with earlier policies, which lacked explicit verification and usage safeguards.
Trump said last month he would allow the sales in exchange for a 25% fee paid to the U.S. government. That announcement drew criticism from several leaders, including former U.K. Prime Minister Rishi Sunak, who called the move "naive" and questioned whether these chips could really be kept away from military applications.
However, analysts, including Futurum CEO Daniel Newman, argue that China's best chance of remaining competitive in AI depends on continued access to Nvidia's chips. In other words, this matters a lot for China's tech ambitions.