NVIDIA And AMD AI Chip Exports To China Raise Security Alarms For US Analysts

The artificial intelligence race has gone global, and the battle for dominance is no longer about who builds the smartest chips but who controls where those chips go. Whoever leads in AI hardware will hold a crucial edge in global AI influence.

However, with rising tensions between the U.S. and China, controlling the flow of advanced AI chips has become a major point of conflict.

For decades, U.S. policy on sensitive technology exports was simple: if it posed a national security risk, it didn’t leave the country; no exceptions or negotiations. That’s why President Donald Trump’s latest move is raising eyebrows in Washington and beyond.

In a surprise deal, Trump has allowed NVIDIA to resume sales of its previously banned H20 AI chips to China, in exchange for the U.S. government taking a 15% cut of the revenue from those sales.


AMD has reportedly struck a similar agreement. The administration is also open to letting NVIDIA sell a scaled-down version of its flagship Blackwell chips to China.

This marks a sharp break from the long-standing practice of keeping export controls off the bargaining table. “Export controls are a frontline defense in protecting our national security, and we should not set a precedent that incentivizes the government to grant licenses to sell China technology that will enhance its AI capabilities,” said Representative John Moolenaar, chair of the House Select Committee on China.

His Democratic counterpart, Representative Raja Krishnamoorthi, warned that “by putting a price on our security concerns, we signal to China and our allies that American national security principles are negotiable for the right fee.”

The administration argues the risk is minimal, calling the H20 NVIDIA’s “fourth-best chip” and noting it’s already widely sold in China. Still, trade lawyers question whether the 15% payment amounts to an illegal export tax, and analysts warn the levy could cut NVIDIA and AMD’s China margins by as much as 15 percentage points.

Critics say it sets a “slippery slope” as security rules could be bent for a payout. Sarah Kreps of Cornell University says, “I don’t think this is unique in that this will be the last kind of deal like this that we see.”

Now, Beijing is hitting back.

Chinese regulators have told state firms and security-related companies to avoid NVIDIA’s H20 chips, the most advanced chip that the U.S. is allowing for sale in China, after lifting last month’s ban.

The guidance comes after Chinese state media raised security concerns over the H20. Regulators have also questioned Alibaba and ByteDance on why they’re buying U.S. chips instead of local ones, leading some firms to cut orders.

NVIDIA maintains the H20 is “not a military product or for government infrastructure” and has “no backdoors” for remote access.

“China has ample supply of domestic chips to meet its needs. It won't and never has relied on American chips for government operations, just like the U.S. government would not rely on chips from China,” Nvidia representatives said.


The guidance is expected to benefit local chipmakers such as Huawei and SMIC, whose shares rose 5%, while impacting AMD’s AI accelerators, although officials from the company haven’t confirmed it.

The timing of the Chinese government’s statement is notable, coming just a day after Trump proposed allowing NVIDIA to sell a scaled-down version of its top Blackwell chip in China. It also follows shortly after the administration’s revenue-sharing deal with NVIDIA and AMD reignited debate over whether U.S. export controls were being relaxed for financial gain.

A situation like this is very rare for the U.S., affecting corporate deals, national security, and government revenue with one export deal.

Do you think the U.S. is giving up its AI advantage with this deal? Can China’s homegrown AI businesses take on U.S.-based AI chips on the global scale?

Let us know your thoughts in the comments section below!