President Donald Trump announced Monday a significant policy shift, allowing Nvidia to sell an advanced type of computer chip, specifically the H200, to “approved customers” in China. This decision aims to support American jobs and manufacturing while benefiting American taxpayers, as the U.S. will reportedly take a 25% cut of these sales. Nvidia, a key player in the artificial intelligence sector, applauded the move, stating it would facilitate domestic manufacturing and strike a thoughtful balance between economic and national security priorities, with the Commerce Department vetting commercial customers.

The H200 chip, while advanced, is not Nvidia’s most cutting-edge product; newer chips like Blackwell and the upcoming Rubin were not part of this approval. Reports indicate that only H200 chips that are approximately 18 months old would be permitted for export. President Trump communicated this decision to China’s leader Xi Jinping, who reportedly responded positively. Furthermore, the Commerce Department is finalizing details for other chipmakers, such as AMD and Intel, to sell their technologies abroad, indicating a broader strategic approach to the technology trade.

However, the decision has drawn significant criticism and concern from a bipartisan group of senators. Democratic senators, including Chris Coons, Jeanne Shaheen, Jack Reed, Elizabeth Warren, Brian Schatz, Andy Kim, Michael Bennet, and Elissa Slotkin, objected vehemently. They argue that access to these chips could provide China’s military with transformational technology, enhancing its weapons, enabling more effective cyberattacks against U.S. businesses and infrastructure, and strengthening China’s economic and manufacturing sectors. This sentiment is echoed by observations from Chinese AI companies like DeepSeek, which previously cited the lack of access to advanced American-designed chips as their biggest challenge in competing with U.S. giants like OpenAI, Google, and Microsoft.

The policy also conflicts with legislative efforts, such as the Secure and Feasible Exports Act (SAFE Chips Act), introduced by Republican Senator Pete Ricketts and Democratic Senator Chris Coons on December 4. This proposed bill seeks to block export licenses for advanced AI chips to China for more than two years (30 months). The Trump administration’s stance on chip exports to China has varied, previously imposing licensing requirements, rescinding a Biden administration diffusion rule, and at one point signaling exports would be allowed with a 15% revenue cut. Meanwhile, China’s Cyberspace Administration of China had previously banned domestic companies from buying Nvidia’s chips, leading them to rely on less advanced domestic alternatives from companies like Alibaba and Huawei, further complicating the market dynamics.

The approval underscores the increasing influence of Nvidia’s founder and CEO, Jensen Huang, with the presidency. Despite national security concerns, which were a primary focus of the Biden administration’s efforts to limit exports, the announcement reportedly led to a slight increase in Nvidia’s stock in after-hours trading, reflecting the company’s substantial market capitalization of $4.5 trillion. This development highlights the ongoing tension between fostering economic growth through technology exports and safeguarding national security interests in the rapidly evolving field of artificial intelligence.