Witnesses and lawmakers at a foreign affairs hearing blasted the Trump administration’s approval for the sale of Nvidia’s H200 AI chips to China and called for it to reverse the decision, as the White House’s top technology adviser defended the move in the administration’s first public testimony discussing the latest export control measures.
Allowing China to buy Nvidia’s second most powerful AI chip is a “wrong path” that would “supercharge” Beijing’s military modernisation and damage the US’ goal to win the AI competition, former Deputy US National Security Adviser Matt Pottinger said on Wednesday at a hearing convened by the House Committee on Foreign Affairs to discuss how the US can win the AI race against China.
The Trump administration on Tuesday released new rules that would allow US chip giants Nvidia and AMD to sell certain advanced AI chips to China under a series of conditions such as having them tested in a US lab and exporting no more than half of the total amount sold domestically.
Trump announced in December that he would allow Nvidia to export its H200 chips to China with the US government getting a 25 per cent cut of sales. On Wednesday, he signed a proclamation to impose a 25 per cent tariff on advanced chips like Nvidia’s H200. The move targets chips that pass through the US for re-export, allowing the government to take a significant cut of Nvidia’s China sales.
The H200 deal showed that US policy “has been seemingly reshaped by business executives who promote China as a partner and prioritise short-term profit over the national interest”, witness Oren Cass, founder and chief economist of the conservative Washington-based think tank American Compass, said at the hearing.
Lawmakers from both parties raised questions about the move. Ranking member of the committee Gregory Meeks said that there is an “overwhelming consensus” among Democrats and Republicans that the US must lead the AI race, and that by easing export controls on advanced AI chips, the administration is “ceding our advantage” in the AI race and “actively undermining our national security”.
“The administration has used our export controls not as a vital national security tool, but as a bargaining chip in tariff negotiations with China,” Meeks said. “Desperate to resolve the trade war he started, Donald Trump has made multiple concessions to China to secure a trade deal.”
Michael Kratsios, director of the Office of Science and Technology Policy (OSTP), defended the administration’s decision on Wednesday.
Speaking at a hearing convened by the House Science Committee, Kratsios stressed that Nvidia’s most advanced chips – its Blackwell line and coming Rubin series – would not be available to China.
Calling the H200 a “suboptimal chip”, Kratsios said that the US wanted to create “an export control environment that protects the sort of crown jewel technologies that drive AI development from getting in the hands of our competitors”.
He also emphasised the limit on the amount of H200 chips that China would be able to access, responding to concerns that exporting the chips there would cause a shortage in the US.
“We’re not opening the floodgates for the PRC to purchase as many H200s as they want. The aggregated export of the chips is capped at 50 per cent of US customer volume for this specific chip,” he said.
The OSTP director added that Chinese companies would not be able to use the H200 to build data centres overseas to compete with US hyperscalers like Amazon.
“If you’re a large Chinese tech company and you want to build a data centre in Malaysia, you cannot buy H200s to do that. You can only import those H200s for facilities in China.”
Responding to concerns raised by Democrat Bill Foster that the chips could be used for military purposes like nuclear weapon design and military logistics, Kratsios said: “The Chinese already have access to chips that can work on all these.”
Not all lawmakers, however, criticised the relaxed measures.
“I’m glad we’ve taken off the restrictions so that China can actually purchase them, so that we can actually continue to be the standard, rather than the beta,” said Georgia Republican Rich McCormick at the House Science hearing, adding that the move was good “for business, for Nvidia, for America, for industry in general”.
Access to Nvidia’s H200 chips is also a contentious issue in China as Beijing pushes forward a national technology self-sufficiency drive.
Wei Shaojun, vice-president at the China Semiconductor Industry Association, said in an interview with the state-run Global Times last week that Chinese companies should be cautious about placing orders for H200, and questioned the US government’s “true strategic intent”.
Chinese authorities summoned Nvidia in July to discuss the alleged tracking and remote-control risks of its H20 chips, a less powerful AI chip that was allowed to be sold to China after an earlier ban.
China’s customs authorities told agents this week that Nvidia’s H200 chips are not allowed to enter China, according to a Reuters report on Wednesday citing unnamed sources. -- SOUTH CHINA MORNING POST
