Nvidia must meet licensing terms for AI chip sales to China: US

Nvidia is required to adhere to licensing terms for its AI chips sold to China, according to US Commerce Department Secretary Howard Lutnick.

He said these terms, coordinated with the State Department, are mandatory for the company.

When asked if he trusts China to follow restrictions on the H200 chip, Lutnick deferred to President Trump.

Nvidia’s ability to sell AI chips to China followed a trade truce between US and Chinese leaders in October, which included a one-year delay of some export restrictions.

The company has not agreed to all proposed conditions for chip use in China, such as know-your-customer rules to prevent military access.

Lutnick deferred further questions to the Trump administration, citing the complex US-China relationship and presidential authority over trade and technology policies.

🔗 Source: Reuters

🧠 Food for thought

Implications, context, and why it matters.

The licensing terms for Nvidia exports involve a nine-point certification process for case-by-case review

The policy moves from a “presumption of denial” to a “case-by-case” review for exporting chips such as the Nvidia H200 and AMD MI325X to end-users in China or Macau, if the listed conditions are met 1.
Applicants must certify with supporting data that the aggregate total processing performance (TPP) of relevant “advanced-node integrated circuits” shipped to China or Macau stays at 50% or less of the aggregate TPP shipped to customers in the United States for end-use in the United States for the same advanced computing commodities. The calculation runs from the start of U.S. commercial shipments through the license application date 2.
Firms must certify they will not fill exports if it would delay existing or new U.S. orders, factoring in normal lead times. They must also certify that global foundry capacity that would otherwise produce similar-node or more advanced integrated circuits for U.S. end users will not be redirected to make commodities approved for export to China 2.
Before export, shipments must pass independent third-party testing in the United States by a qualified testing lab to confirm the commodities match the license application. The exporter must send the lab’s certification to the Bureau of Industry and Security (BIS) 2.

This chip policy could boost China’s AI capacity while raising implementation and supply-chain concerns

The looser rules could let China obtain H200-equivalent compute close to 900,000 H200 chips, which CNAS estimates would be about twice China’s expected domestic production in 2026 3.
CNAS says that level of supply weakens the earlier U.S. approach of slowing China’s AI progress. CNAS also says it could encourage chipmakers to press for licenses covering even more advanced chips 3.
CNAS says the promise to prioritize U.S. supply may be hard to back up during shortages, including High Bandwidth Memory (HBM), a fast, high-capacity memory used in many AI accelerators. CNAS adds that the rule tracks U.S. supply rather than whether exports pull capacity away from allies and partners 3.