by Steven Richards
Allow the sale or ban their export? The new export allowances for advanced NVIDIA processors have raised criticism from both Congress and China experts who see a contradiction in policy.
President Donald Trump’s decision to approve the export of advanced computer chips to China comes the same day his Justice Department warned the illegal export of the same chips “threatens our Nation’s security.”
The new export allowances for advanced NVIDIA H200 processors have raised concerns and criticism from both Congress and China experts who see a contradiction in policy.
On one side, people say exporting these chips, which are more advanced than anything China can currently produce, will endanger U.S. security, undermine competitiveness, and present an opportunity for Beijing to steal the technology. Contrasting those views, President Trump said, “I have informed President Xi, of China, that the United States will allow NVIDIA to ship its H200 products to approved customers in China, and other Countries, under conditions that allow for continued strong National Security.”
“President Xi responded positively! $25% will be paid to the United States of America. This policy will support American jobs, strengthen U.S. Manufacturing, and benefit American Taxpayers,” he added.
In an attempt to head off arguments against allowing the Chinese to access the advanced chip, the president noted that neither of NVIDIA's most advanced current and upcoming chips, the Blackwell and Rubin, will be covered under his new export approval.
Having it both ways?
However, both Congress and China experts say, even though H200s are not NVIDIA's most powerful product, they are still far more advanced than anything that China can currently produce, opening the door for the country to advance its Artificial Intelligence at a more rapid rate.
“Right now, China is far behind the United States in chips that power the AI race,” the House Select Committee on China said in a statement after the announcement. “Because the H200s are far better than what China can produce domestically, both in capability and scale, [Nvidia] selling these chips to China could help it catch up to America in total compute.”
The committee warned that China will likely use these chips beyond commercial applications. Beijing “will use these highly advanced chips to strengthen its military capabilities and totalitarian surveillance,” the committee said.
Hudson Institute Senior Fellow Michael Sobolik, author of “Countering China’s Great Game: A Strategy for American Dominance,” agrees with the committee’s assessment and also warned about potential military applications.
Scoring a goal for the other team
"NVIDIA's H200 chips are significantly better than anything Huawei can make. Allowing NVIDIA to sell these chips would be akin to a basketball player scoring a goal for the other team — on purpose,” Sobolik told Just the News in a statement.
“These chips are our biggest tech advantage over China. If we give them away, we shouldn't be surprised when China closes the gap and the People's Liberation Army uses them to train to kill Americans,” he said.
A White House official who declined to be named told Just the News that the H200 chips will undergo a “security inspection” before they are exported to China, but did not clarify what that inspection would entail or whether it will address concerns about China using the advanced chips for military applications.
Export controls of advanced computer chips to specially listed Chinese companies during Trump’s first term were greatly expanded by the Biden administration, which clamped down on exports of advanced processors and semiconductor manufacturing equipment.
Both administrations sought to limit Beijing’s access to advanced technologies and fuel its ability to produce its own advanced chips. Specifically, both highlighted concerns about maintaining dominance in computing and AI, the Congressional Research Service reported.
Approving the export of NVIDIA's H200 gives Beijing access to a much more powerful chip that previous rounds of controls sought to prevent. The H200 is 20 times more powerful than NVIDIA's H20 chip, the export of which was only approved to China in a limited amount.
“China would have access to chips that outperform any chip its companies can domestically produce, and at much higher quantities,” the Institute for Progress, a think-tank that focuses on innovation policy, concluded in a report. Before the announcement, one of China’s leading technology firms, Huawei, was not planning the domestic production of any AI chip as powerful as H200 before 2027.
The confusion begins: "smuggling network"
On Monday, the Department of Justice announced that its “Operation Gatekeeper” had disrupted a scheme to ship $50 million of Nvidia chips to China and apprehended two businessmen for violating the existing export controls. Prosecutors specifically identified Nvidia’s H200 chip as one of the processors exported to China in the scheme.
The prosecutors described the H200 as among the nation’s “cutting-edge AI technology” that China could use contrary to American interests and security, specifically highlighting its military applications.
“Operation Gatekeeper has exposed a sophisticated smuggling network that threatens our Nation’s security by funneling cutting-edge AI technology to those who would use it against American interests,” U.S. Attorney for the Southern District of Texas, Nicholas J. Ganjei, said in a statement.
“These chips are the building blocks of AI superiority and are integral to modern military applications. The country that controls these chips will control AI technology; the country that controls AI technology will control the future. The Southern District of Texas will aggressively prosecute anyone who attempts to compromise America’s technological edge,” the prosecutor continued.
The DOJ announced Monday after court documents were unsealed that Haochun Hsu, 43, of Missouri City, and his company, Hao Global LLC, pleaded guilty to smuggling and unlawful export activities Oct. 10. Between October 2024 and May 2025, Hsu and others exported and attempted to export at least $160 million worth of export-controlled Nvidia H100 and H200 Tensor Core graphic processing units, according to court documents.
The case was unsealed after two men from China — Fanyue Gong, 43, a Chinese citizen who resides in New York City, and Benlin Yuan, 58, a Canadian citizen who resides in Mississauga, Ontario — were charged and arrested by law enforcement on Dec. 3 in New York City, and on Nov. 28 in Sterling, Va., respectively. Both Gong and Yuan are citizens of the People’s Republic of China.
The defendants allegedly falsified shipping paperwork, relabeled the chips, misclassified the products and receipts to conceal the ultimate destination, the Justice Department said.
Hsu and Hao Global purportedly received more than $50 million in wire transfers that originated from China to help fund the scheme. The GPUs were ultimately shipped to China, Hong Kong, and other destinations in violation of U.S. export laws, the Justice Department said.
Gong and Yuan allegedly conspired with employees of a Hong Kong-based logistics company and a China-based AI technology company to circumvent U.S. export controls, the Justice Department said. Prosecutors allege the co-conspirators “obtained NVIDIA GPUs through straw purchasers and intermediaries” and falsely indicated the goods were for U.S. customers or those in permitted third countries that do not require licenses, the Justice Department said.
Conflict between export controls and trade policy
Hsu pleaded guilty and faces up to 10 years in prison at his sentencing in February. If convicted, Yuan faces up to 20 years in prison for a conspiracy to violate export controls and up to a $1 million fine. If convicted, Gong faces up to 10 years for illegal smuggling.
“This case highlights the importance of interagency cooperation to protect U.S. technology; the FBI, alongside our partners, will continue to aggressively investigate these violations and bring those responsible to justice,” Assistant Director of the FBI’s counterintelligence division Roman Roshavsky said on Tuesday.
The statement followed President Trump’s announcement that controls on the NVIDIA chip would be lifted, raising questions about contradictions in the administration’s policies.
The Justice Department did not immediately respond to a request for comment from Just the News about the apparent contradiction.
Steven Richards
Source: https://justthenews.com/government/security/trump-approves-export-advanced-chips-china-doj-says-would-be-national-security
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