Nvidia H20 Chip Sales Resume Amid Rare Earth Talks

Nvidia's China Strategy Linked to Rare-Earth Elements

Recent developments suggest that the availability of rare-earth elements is influencing Nvidia’s approach to the Chinese market.

Initial Withdrawal and Subsequent Reversal

Initially, Nvidia announced plans to curtail operations within China in June. However, the company subsequently indicated it would submit an application to resume sales of its H20 AI chip to China.

U.S. Commerce Secretary's Insights

According to Reuters reporting, U.S. Commerce Secretary Howard Lutnick stated on Tuesday that Nvidia’s decision to reinstate H20 chip sales is connected to ongoing trade negotiations with China concerning rare-earth elements.

AMD is also planning to re-establish sales of its MI308 AI chip within China.

The Importance of Rare-Earth Elements

Rare-earth elements, such as lanthanum and cerium, are predominantly sourced from China. These materials are essential components in various technologies, including the rechargeable batteries powering electric vehicles.

Consequently, these elements have become a central focus in the current trade discussions between the U.S. and China.

Concerns and Criticisms

Not all parties view this trade development favorably.

Congressman Raja Krishnamoorthi expressed concerns, stating that the decision to sell advanced technologies to potential adversaries is inconsistent with the administration’s previous stance on export controls for China.

Downplaying the Impact

However, Lutnick dismissed these concerns, asserting that China is only receiving Nvidia’s “fourth best” chip.

He clarified in an interview that the chips being sold are not among Nvidia’s most advanced offerings – not even its second or third best.

New Chip Design for China

This news follows reports from less than a week ago suggesting Nvidia was developing a new AI chip specifically tailored for the Chinese market.

The aim is to continue business operations in the country without contravening existing U.S. chip export regulations.

Uncertainty Surrounding U.S. Export Rules

The U.S. is currently working to define its future AI chip export policies. The Trump administration revoked the Biden administration’s AI Diffusion Rule in May, and no formal updates have been issued since.

Potential for Expanded Restrictions

Bloomberg reported last week that the Trump administration was considering further restrictions on AI chip exports to countries like Thailand and Malaysia, in an effort to prevent smuggling.

Malaysia has already implemented trade permits for U.S.-made AI chips, effective Monday.

TechCrunch has reached out to Nvidia for further comment.