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Commerce secretary Howard Lutnick announced that the US has lifted restrictions on the sales of chips to China following recent trade negotiations with Beijing over rare earths. This decision comes after President Donald Trump imposed limits on exports of Nvidia’s H2O artificial intelligence chips to China in April, as part of the escalating trade war with Beijing.
However, a source familiar with the situation revealed that the commerce department will begin approving export licenses for these chips, following Nvidia’s announcement that it anticipates resuming sales to Chinese companies. Lutnick disclosed that the relaxation of export controls was a result of recent trade talks between American and Chinese officials in London and Geneva, as they sought to de-escalate trade tensions.
The US has been urging China to ease export controls on seven rare earth elements and magnets crucial for the production of various defense and clean energy technologies. Lutnick mentioned in an interview on CNBC, “In the magnets deal with the Chinese, we told them that we would start to resell them.”
He also explained that the chip being sold to China was tailored to comply with 2022 Biden-era controls, aimed at preventing the sale of the most powerful chips to Chinese companies. Lutnick emphasized, “We don’t sell them our best stuff, not our second-best stuff, not even our third best.” He further highlighted that it is in the interest of the US to keep Chinese companies reliant on American technology.
The easing of restrictions marks a significant victory for Nvidia, whose CEO, Jensen Huang, recently met with Trump at the White House to caution against the risk of America losing its leadership in AI to Chinese firms if critical technology exports were halted.
In a recent visit to Beijing, Huang stressed the importance for American companies to compete and cater to the market in China. The H20 chip, while less potent than Nvidia’s top-tier chips, had been utilized by prominent Chinese AI players such as ByteDance, Alibaba, and Tencent before the restrictions were imposed.
Following the news, Nvidia’s shares surged by 4% on Tuesday. Additionally, rival chip designer AMD, which also faced restrictions in April, confirmed that the commerce department had informed them that licenses for exporting its MI308 chip would resume.
The decision to ease restrictions on chip sales to China signifies a positive development in the ongoing trade negotiations between the US and China, with implications for the global tech industry.
