Nvidia: The AI Chip Giant Navigating US-China Tensions James Chater | BBC News | 1 day ago Nvidia, a leading computer chip manufacturer, has once again become a focal point in the escalating trade and technology tensions between the US and China. On Thursday, Nvidia CEO Jensen Huang traveled to Beijing to meet with senior Chinese officials just after the US imposed new export restrictions on Nvidia’s AI chips. The US Commerce Department announced that Nvidia now requires licenses to export its H20 AI chip to China, citing concerns over "national and economic security. " Nvidia revealed that federal officials indicated this requirement will remain in place "for the indefinite future. " Nvidia’s Importance in the US-China AI Competition Nvidia designs advanced semiconductors essential for generative AI, which can create new content from prompts, as seen in tools like ChatGPT. The surge in global demand for AI chips has propelled Nvidia to become one of the most valuable companies worldwide; in November, it briefly surpassed Apple as the world's largest company by market capitalization. Given the chips’ critical role in AI advancements, the US government has closely monitored Nvidia’s dealings with China. Washington aims to curb China’s progress in producing advanced AI chips—particularly to prevent the Chinese military from gaining access—and maintain a competitive edge in AI technology. Background on US Restrictions and Nvidia’s H20 Chip US restrictions on sales of advanced chips to China have been in place since 2022 under the Biden administration. Nvidia designed the H20 chip specifically to comply with these existing controls, while its more powerful H100 chip is already banned for sale in China. However, a new Chinese generative AI firm, DeepSeek, has raised US concerns by claiming it can perform at levels comparable to ChatGPT using less advanced chips like the H20. This development has driven increased Chinese demand for the H20 from major tech firms—including Tencent, Alibaba, and ByteDance (TikTok's parent). Because there is no grace period for the newly tightened export controls, Nvidia anticipates a $5. 5 billion loss in revenues from unfulfilled Chinese orders. Alternative AI Chips and China’s Response Chim Lee, a senior analyst at the Economist Intelligence Unit in Beijing, told the BBC that Chinese firms such as Huawei are developing alternative AI chips.

Though currently considered inferior to Nvidia’s products, Lee suggests that US restrictions could motivate China to accelerate its chip development. He commented, "It will introduce challenges to China's AI scene, but it won't massively slow down China's AI development and deployment. " Why Jensen Huang Visited China China remains a vital market for Nvidia, accounting for 13% of its sales last year, compared to nearly half from the US market. Huang’s visit is widely viewed as an effort to sustain Nvidia’s business in China despite the new US export measures. During meetings in Beijing, Huang expressed a desire to "continue to cooperate with China, " according to state broadcaster CCTV. Reports from the Financial Times reveal that Huang also met DeepSeek’s founder, Liang Wenfeng. Additionally, senior Chinese official He Lifeng highlighted China's significant market investment and consumption potential during discussions with Huang, as reported by Xinhua. Huang reaffirmed his commitment to the Chinese market during talks with Shanghai’s mayor on Friday, according to a Shanghai government statement. In summary, Nvidia finds itself at the crossroads of US-China AI competition, facing strict US export controls while striving to maintain and grow its presence in the crucial Chinese market amid rising geopolitical tensions.