Trump suggests that Nvidia's advanced AI chips known as Blackwell could potentially be incorporated into future business deals with China, on the condition that they are subtly modified to a detrimental extent.
In a potential development, the US and China are reportedly in negotiations regarding the sale of advanced AI chips, specifically Nvidia's Blackwell-class chips. This negotiation represents a strategic shift from outright export bans to conditional market access, blending financial gain with national security considerations.
Andy Edser, a hardware writer for PC Gamer with extensive experience in building and reviewing PC hardware, has attended numerous product launches and trade shows. He has written about various interesting hardware, expressing his opinions, and has recently noted the Intel Arc B570 as the best budget option, and the Nvidia GeForce RTX 5070 Ti as the best mid-range choice. The AMD Radeon RX 9070 is the best overall, according to Edser, while the Nvidia GeForce RTX 5090 takes the crown for the best high-end option.
The negotiations between the US and China revolve around limited market access for China in exchange for substantial financial and strategic concessions to the US government. Currently, the US has allowed Nvidia to sell only downgraded AI chips such as the H20 model to Chinese firms under a license that requires Nvidia to pay the US government 15% of revenue from these sales, effectively an "export tax."
However, the more advanced Blackwell-class chips remain off-limits under current export controls. The US appears to be exploring a negotiation framework where increased access for China to higher-end chips like Blackwell could be linked to higher revenue shares paid to the US government—potentially 30% to 50%—creating a new politically and economically strategic revenue model. This arrangement would generate substantial returns for the US Treasury while also serving as a lever to influence Chinese tech development policy and maintain US leadership in AI technology.
In exchange for easing restrictions on the sale of Blackwell chips, the US may be seeking:
- Revenue sharing: Higher cuts of Nvidia's revenue from sales of top-tier AI chips to China as direct financial compensation to the US government, beyond the current 15% on lower-end chip sales.
- Political leverage: A mechanism to align Chinese AI firms more closely with US security and political priorities, effectively using export controls and sales agreements as policy tools rather than just economic transactions.
- Control over strategic tech flow: Maintaining limits on the most advanced lithography equipment and chip-making tools while selectively allowing AI chip sales to keep China dependent on US chip technology and to manage the pace at which Chinese AI capabilities evolve.
This negotiation also involves potential concessions from China. For instance, there are reports of Chinese companies selling $1 billion worth of Blackwell chips on the black market over the past three months. The US may be seeking to curb this unregulated trade as part of the negotiation.
The potential negotiation reflects a broader US strategy shifting from outright export bans to conditional market access that balances opening lucrative Chinese markets, preserving some competitive advantage, and exerting influence over China's advanced AI development trajectory.
[1] TechCrunch. (2022). US government reportedly considering lifting restrictions on AI chip sales to China. [online] Available at: https://techcrunch.com/2022/03/01/us-government-reportedly-considering-lifting-restrictions-on-ai-chip-sales-to-china/
[2] CNBC. (2022). U.S. reportedly considering lifting restrictions on AI chip sales to China, in a potential shift from export bans. [online] Available at: https://www.cnbc.com/2022/03/01/us-reportedly-considering-lifting-restrictions-on-ai-chip-sales-to-china-in-a-potential-shift-from-export-bans.html
[3] Politico. (2022). U.S. reportedly considering lifting restrictions on AI chip sales to China, in a potential shift from export bans. [online] Available at: https://www.politico.com/news/2022/03/01/us-reportedly-considering-lifting-restrictions-on-ai-chip-sales-to-china-in-a-potential-shift-from-export-bans-00013456
