WASHINGTON D.C. – Former President Donald Trump has indicated the possibility of further restrictions on the sale of advanced artificial intelligence (AI) chips to China, specifically Nvidia’s Blackwell processor. This follows a recent agreement allowing exports of the less advanced H20 chip,contingent on the U.S.government receiving 15% of sales revenue.

Speaking at a press conference at the White House on May 3, 2024, Trump suggested a potential meeting with Nvidia CEO Jensen Huang to discuss the Blackwell chip. he floated the idea of the U.S. government taking a significantly larger share of revenue – between 30% and 50% – from Blackwell sales, characterizing it as a more advanced chip than the H20.

Trump downplayed the importance of Nvidia regaining a license to sell the H20 chip to China, stating it was “obsolete” despite still having a market. He alleged that Chinese companies like Huawei already possess comparable technology, either through option versions or combinations of existing chips.

“It is indeed basically selling an old chip, from which Huawei already has a similar version, which does the same,” Trump stated. He clarified that no formal agreement currently exists for the sale of the Blackwell chip, though it remains a possibility.

The agreement reached last Wednesday,May 1,2024,between Huang and Trump stipulated the 15% revenue share for the U.S. government on H20 chip sales to China – an unprecedented arrangement effectively making the government a partner in thes transactions. The Department of Commerce began issuing sales licenses for the H20 chip two days later, on May 3rd.

Advanced Micro Devices (AMD) is also reportedly joining the agreement, according to reports from The Wall Street Journal and Bloomberg. this move comes amid ongoing U.S. efforts to control the flow of advanced technology to China,citing national security concerns. The Biden administration has continued many of the restrictions initially implemented during the Trump administration.

Context: The U.S.-china Tech War

The restrictions on chip sales are part of a broader strategic competition between the U.S. and China in the realm of artificial intelligence. The U.S. fears that China’s advancements in AI could have military applications and pose a threat to national security. The Blackwell chip, with its significantly enhanced processing power, represents a key technology in this competition. Nvidia’s Blackwell architecture, unveiled in March 2024, boasts a 30x AI performance increase over its predecessor, the Hopper architecture.

the H20 chip, while less powerful, remains a valuable component for AI development. The licensing agreement allows Nvidia to continue serving the Chinese market, albeit with a financial contribution to the U.S. government. The 15% revenue share is estimated to generate hundreds of millions of dollars for the U.S. Treasury. The agreement is being scrutinized by legal experts regarding its long-term implications and potential conflicts of interest.

Looking Ahead

The future of AI chip exports to China remains uncertain. Further restrictions on the Blackwell chip could significantly impact Nvidia’s revenue and perhaps slow down China’s AI development. The situation is likely to evolve as both countries navigate the complex geopolitical and economic considerations at play. The Commerce Department is expected to release further details on the licensing process for both Nvidia and AMD chips in the coming weeks.