Nvidia’s AI chip sales to China remain in limbo as Washington weighs national security safeguards against the risk of pushing buyers toward foreign rivals.

Summary:

  • Nvidia’s proposed AI chip sales to China face fresh licensing conditions

  • ByteDance deal hinges on US national security safeguards

  • Nvidia pushing back on commercially impractical KYC requirements

  • Trump administration broadly supportive of limited AI chip exports

  • Licensing uncertainty keeps geopolitical risk in focus for chipmakers

Info via Reuters.

Nvidia’s ability to resume AI chip sales to China is emerging as a key test case for the Trump administration’s evolving technology export controls, with negotiations now centring on how far national security conditions can go without choking off commercial activity.

According to sources familiar with the discussions, the US administration is prepared to approve licences allowing China’s ByteDance to purchase Nvidia’s H200 AI chips. However, the sale has yet to proceed as Nvidia has not agreed to the full set of proposed conditions governing how the chips would be used once delivered.

A key sticking point is a “Know Your Customer” requirement drafted by US authorities, designed to ensure the chips are not accessed by China’s military or diverted for prohibited uses. While the licence approval was signalled around two weeks ago, Nvidia is still negotiating over the scope and practicality of those safeguards.

Nvidia said it is acting as an intermediary between the US government and potential Chinese customers, stressing that it does not unilaterally accept or reject licence terms. The company acknowledged the importance of customer vetting, but warned that conditions must remain commercially workable if US firms are to compete globally. Executives have cautioned that overly restrictive rules risk accelerating the shift toward non-US chip suppliers.

The talks extend beyond ByteDance, with Nvidia also negotiating licences to ship similar AI processors to other Chinese firms. Sources said the administration is expected to permit limited exports of Nvidia and AMD AI chips, following approval at the highest political level, once national security concerns are addressed.

For markets, the episode underscores the fragile balance between national security policy and commercial realities, with AI chip exports to China remaining subject to sudden regulatory shifts and political recalibration.

This article was written by Eamonn Sheridan at investinglive.com.

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