US President Donald Trump’s decision on Monday — first reported by Semafor — to allow Nvidia to ship its H200 AI chips to China jolted the trade war between the two countries. But inside top American AI firms, executives say the biggest impact won’t be in Washington or Beijing — it will be everywhere else.
AI executives at top labs, who spoke to Semafor on the condition of anonymity, said they expect the availability of Nvidia H200s to Chinese firms will result in new competition from companies like Alibaba, which have so far been prohibited from acquiring advanced, US-made AI chips.
The worry, these people say, is that China will use Nvidia’s chips to build data centers around the world that offer cheaper prices for running models inspired by, or even stolen from, US AI firms.
“Competition brings out the best in us. It’s just different when it’s China,” said Gregory Allen, senior adviser with the Wadhwani AI Center at the Center for Strategic and International Studies, in an interview with Semafor. “They are willing to lose hundreds of billions of dollars just to gain market share and they have state-backed industrial espionage on a massive scale.”
The White House sees it differently, according to people familiar with the matter. Administration officials do not believe Chinese firms pose a serious threat to US hyperscalers vying for market share outside the US, in part because the volume of H200 chips sent to China will be too low to matter, they say, although a limit has not been announced. Sales will need to be approved and licensed, giving the administration power over that number.
The H200s are also a generation behind Nvidia’s most advanced chips, and Chinese firms do not yet have products that compare to offerings from US hyperscalers and frontier AI labs, they believe.
Instead, White House officials view sales of H200s as a way to slow down advances by Huawei and other Chinese firms in the AI stack. If Chinese firms are able to take advantage of powerful Nvidia chips, they’ll develop technology in Nvidia’s ecosystem, including its powerful Cuda software, and slow efforts to develop their own technology.
Under the plan, the administration will allow ongoing licenses that let approved Chinese buyers stay about 18 months behind the state of the art, essentially keeping them “hooked” on US technology and distracted from building their own.
Meanwhile, administration officials point to the Chinese Communist Party’s signals that it might limit the number of H200 chips as evidence that the party agrees that the chip imports could reduce the incentive for companies to build a homegrown alternative.
“The Trump administration is committed to ensuring the dominance of the American tech stack – without compromising on national security,” White House spokesman Kush Desai said in a statement to Semafor.