In the first few months after President Trump returned to the White House, he held firm to an American technology policy that stretches back to the depths of the Cold War.
Don’t sell your adversaries America’s most advanced technology, the thinking went in those early months — starting with the computing power that has given the United States its edge in space and cyberspace, and in designing nuclear weapons and next-generation fighters.
But all that began to change a few months ago. A handful of the nation’s richest technology executives and Mr. Trump’s own artificial intelligence chief, David Sacks, arrived in Washington with a counterargument: that America’s best bet is to suck China and other nations into the “American tech stack,” the layer cake of American hardware and software that would make China’s users dependent on the most advanced chips in the American arsenal.
Quickly that argument focused on the chips designed by Nvidia, now the world’s largest company, at least when measured by its $4.48 trillion market capitalization. The company won a huge victory late Monday afternoon, when Mr. Trump declared on his social media account that he was freeing Nvidia to sell its second most powerful chip, known as the H200, to China.
The chip gives the Chinese a chance to speed ahead in the neck-and-neck artificial intelligence race. China’s own top executives, even the leaders of its most successful A.I. venture, DeepSeek, complain that their progress is limited by a shortage of computing power. Mr. Trump offered little rationale behind the decision, and said nothing about the intense lobbying by Jensen Huang, Nvidia’s chief executive and a frequent visitor to the White House.
But he did say that in return, 25 percent of all the revenues from the sales would go to the United States.
With that announcement, Mr. Trump made clear that decisions once made purely on the basis of national security were now up for sale — a move of dubious legality, since export licenses cannot be sold under existing federal law.
But it also raised the question: If the chips that power the most advanced technology can be sold to the United States’ chief technological, military and financial competitor, where is the new line drawn? By the same logic that it is better to have China using American technology, should Washington sell it F-35s? Advanced missiles?
And what happens when the Chinese break through the high barrier of producing the chips themselves? At that moment, do they stick with Nvidia’s astounding chips, essentially a supercomputer in a tiny box? Or, having received a huge boost from Mr. Trump’s decision, do they break out of the tech stack, and turn back to state champions like Huawei, the telecommunications giant that hopes to take on Nvidia, and rely on their own technology, as President Xi Jinping has seemed to suggest?
Not surprisingly, on Capitol Hill and beyond, the administration’s decision is under new examination and, from many quarters, outright attack. Much as Mr. Trump has upended alliances and the post-World War II order, he is now loosening the stricture of export controls that kept Western technology from its rivals — first from the Soviets, then from China and an array of other competitors.
In an era in which China is producing far more electric cars and solar panels than the United States, dominating in batteries and surging ahead in biotechnology, the design of the most advanced semiconductors is one of America’s few sparkling gems, an arena where China has struggled to keep up. To many veterans of the chip wars, Mr. Trump is prioritizing short-term economic gain over long-term U.S. security interests.
“This decision is nuts,” said Jake Sullivan, who served as national security adviser under President Joseph R. Biden Jr. and designed many of the Biden-era restrictions on chip sales to China.
“America and China are competing for leadership on A.I.,” Mr. Sullivan said. “China’s main problem is they don’t have enough advanced computing capability. It makes no sense that President Trump is solving their problem for them by selling them powerful American chips. We are literally handing away our advantage. China’s leaders can’t believe their luck.”
Mr. Sacks sees it differently. One of Silicon Valley’s most successful tech entrepreneurs, he began arguing in the late spring for what he called a “more nuanced” view. When Mr. Trump agreed to allow Beijing to buy a custom, somewhat dumbed-down Nvidia chip, called the H20, he argued that it was the best way to keep Huawei, China’s telecommunications giant and an aspirant to take on Nvidia, from dominating its home market. Mr. Sacks said it was a logical choice.
“You just don’t want to hand Huawei the entire Chinese market,” Mr. Sacks said on Bloomberg television, “when Nvidia is capable of competing for a big slice of it.” The idea, he said, was to deprive Huawei of huge revenues from its older, slower chips that it could pour into research and development. “It’s a huge subsidy for their R&D,” he continued.
But the Chinese didn’t bite. They refused to buy the H20, saying privately that they were insulted to be offered a chip whose powers were crippled. It may have been a negotiating tactic to get a more advanced chip, called the H200, which Nvidia brought out about a year and a half ago. If so, it worked. Mr. Trump agreed, saying vaguely on social media that it could be shipped “to approved customers in China, and other Countries, under conditions that allow for continued strong National Security.”
Mr. Trump said nothing about what those conditions would be. But a White House official, who declined to speak on the record about policy decisions, cast the decision as a compromise, splitting the difference between a national security establishment that would ship the Chinese nothing, and Mr. Huang, who they said wanted permission to ship all his products to China.
(The company’s fastest chip, the one sought by companies seeking to vastly improve their large-scale A.I. offerings and build data centers for high-performance computing, is called the Blackwell. It is still barred for export to China.)
Of course, there is the matter of the 25 percent cut for the U.S. government, part of Mr. Trump’s argument that he is bringing in cash not only for Nvidia’s shareholders but also relieving the burden on American taxpayers. Appealing as that sounds, it creates a situation that appalls most national security traditionalists, who think export controls should be decided according to standards of potential harm to America’s advantage, particularly its military edge. Selling that off for short term profit, they argue, is a prescription for trouble.
Mr. Sullivan, who is now the Kissinger professor of the practice of statecraft and world order at Harvard’s Kennedy School of Government, says it is clear what may happen next. China’s leaders “intend to get off of American semiconductors as soon as they can,” he said. “So the argument that we can keep them ‘addicted’ holds no water. They want American chips right now for one simple reason: They are behind in the A.I. race and this will help them catch up while they build their own chip capabilities.”
It may also create a problem with American allies. One company in the Netherlands, ASML, makes the wildly expensive, precision machinery needed to cut the tiniest of circuits on advanced chips. After lengthy negotiations, the company agreed in the Biden years to cut off China from the most advanced chip-making equipment.
But now that it sees the United States profiting from advanced chip sales, it may well question why it should listen to Washington’s entreaties about the dangers of giving too much technology to Chinese makers.
“It’s not reasonable to tell our allies we are going to sell the chips but you can’t sell the machines that make those chips,” said Rush Doshi, a China expert at Georgetown University and the Council on Foreign Relations. “As a result, it is possible that the allied coordination that supports our most important export controls might be seriously damaged by this decision.”
David E. Sanger covers the Trump administration and a range of national security issues. He has been a Times journalist for more than four decades and has written four books on foreign policy and national security challenges.
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