Trump Officials Discussing Tightening Curbs on Nvidia's China Sales, Sources Say

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01 Feb 2025, 18:20

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Trump administration officials are exploring additional curbs on the sale of Nvidia chips to China, according to sources familiar with the matter, who emphasised that conversations are in very early stages as the new team works through policy priorities.

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Officials are focused on potentially expanding restrictions to cover Nvidia's H20 chips, according to the sources, who asked not to be identified because the discussions are private. That offering, which can be used to develop and run artificial intelligence (AI) software and services, is a scaled-down product designed to meet existing US curbs on shipments to China.

The sources added that a decision on any restrictions is likely a long way off, given that the Trump administration is only beginning to staff up in relevant departments. Commerce Secretary nominee Howard Lutnick, Trump's pick to lead the agency that oversees chip trade curbs, said during a confirmation hearing on Wednesday (Jan 29) that he would be "very strong" on semiconductor controls, without providing more specifics.

A spokesperson for the White House did not immediately respond to a request for comment. An Nvidia spokesperson said that the company ''is ready to work with the administration as it pursues its own approach to AI''.

A decision to tighten restrictions on Nvidia would be a further escalation of tensions between the world’s two largest economies. It comes as the US government and technology industry respond to evidence that China is further along in the AI race than anticipated.

For Nvidia, which has been under restrictions on what it can sell in China since 2022, an extension of the rules would further hurt its revenue in the largest market for semiconductors. It has argued that restrictions reinforce Chinese determination to make itself independent of US technology and will weaken US companies – two things that run counter to the aims of the trade actions.

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''The thresholds set by the Biden administration are based on performance levels reached five years ago,'' the company said.

H20 is the result of previous rounds of restrictions that first required Nvidia to seek licenses for exports of its best AI chips. The company responded with downgraded variants – called H800 – that were not as powerful. But President Joe Biden's administration then imposed tighter performance limits in 2023 that included that chip. Nvidia responded with the H20, a further scaled-down version.

The idea of tightening existing trade curbs to include H20 chips has been kicked around in Washington for some time. Staff in the Biden administration recommended such restrictions, the sources said, but officials ultimately did not pursue the measures before leaving office.

Nvidia chips, already the most sought-after technology in the AI boom, are coming under even more intense scrutiny after Chinese startup DeepSeek released a new AI model that it said rivals the performance of offerings from OpenAI, Alphabet's Google and Meta Platforms. The Chinese company said its system was built at a fraction of the cost and used older Nvidia chips.

The potential threat to the US firms' edge in the industry triggered a swoon for tech stocks, including Microsoft, Nvidia, Oracle and Google, erasing a total of almost US$1 trillion in market value on Monday. Microsoft and OpenAI are investigating whether data output from OpenAI's technology was obtained in an unauthorised manner by a group linked to DeepSeek, according to sources familiar with the matter.

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