The Donald Trump administration has allowed the export of NVIDIA's artificial intelligence (AI) semiconductor 'H20' chip to China again, which is said to be a response to China's decision to lift its export controls on rare earth materials during last month's U.S.-China trade negotiations.

Jensen Huang, CEO of Nvidia. /Courtesy of AFP=Yonhap News

Howard Lutnick, the U.S. Secretary of Commerce, said in a CNBC interview on the 15th (local time), "We have agreed to resume the export of rare earth magnets to China, and in return, we have said we will sell chips again to China." During the second U.S.-China trade negotiations held in London in June, both countries agreed to lift some reciprocal export controls, and this decision is part of that.

Minister Lutnick emphasized regarding the H20 chip, "This is an old chip. We do not sell our best products to China. We only sell chips at the fourth level, not the second or third." He added, "NVIDIA already has higher-performing Blackwell, H200, and H100 chips."

Minister Lutnick commented on President Trump's strategy, saying, "The goal is to continuously develop technology that is one step ahead of what China can develop on its own, while inducing China to continue purchasing lower-level technologies." He stated, "It is aimed at making Chinese developers addicted to American technology."

Previously, NVIDIA had been exporting the lower-performance H20 chip to China to circumvent restrictions on high-performance AI semiconductors during the Biden administration. However, the Trump administration began applying export permit regulations to the H20 chip starting in mid-April.

Afterwards, the export control of the H20 chip was utilized as a bargaining chip during the U.S.-China trade negotiations held in Geneva in May and in London in June. Scott Bessent, the U.S. Secretary of the Treasury, said in an interview with Bloomberg TV, "China had what we wanted, and we had what China wanted," adding, "The H20 export control was a card used for negotiations."

The Trump administration believes this is a realistic strategy to maintain the global market share of its corporations. David Sacks, head of AI and cryptocurrency policy, said in a Bloomberg TV interview, "To prevent Huawei from dominating the AI semiconductor market in China and globally, and using those revenues to enhance competitiveness, American corporations must be able to sell semiconductors at a certain level."

Sacks warned, "If other countries prevent the use of American technology, it will instead drive them into the hands of China," stating that "market share will be captured by U.S. corporations or Chinese corporations like Huawei in a zero-sum game."

He also added, "We hope that not just semiconductors, but also the operating systems and data centers on which AI models run become the global standard for American technology," stating, "This is akin to the dollar; technological hegemony should be established like a reserve currency."

Meanwhile, Minister Lutnick claimed in the interview that the imposition of steel tariffs by the U.S. effectively subsidizes domestic steel companies in certain countries, including Korea, through electricity tariffs. He stated, "China, Japan, and Korea provide electricity almost for free and then dump steel to the U.S.," adding, "This causes the U.S. steel industry to be impacted." In response, the Korean government and the steel industry maintain that this is not factual.

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