Trump administration enacts security rules for Nvidia’s China chip sales
The chip designer and its customers must satisfy security requirements before exports are approved.
Nvidia must meet new security requirements before sending its H200 artificial-intelligence chips to China, the Trump administration said.
The details
Under the rules, Nvidia must make sure there is sufficient supply of AI chips in the U.S., and its customers have to demonstrate adequate security procedures before semiconductors are shipped, the Commerce Department’s Bureau of Industry and Security said in a rule published Tuesday. Nvidia will also have to get its products tested by an outside lab in the U.S. to make sure they meet performance parameters.
The rules governing Nvidia’s exports are the next step in the U.S. government allowing the company to resume shipments to China. Exports have effectively been halted since April, denting Nvidia’s business in the world’s second-largest economy and pinching Chinese AI companies that want the chips to train their models.
The administration has approved the exports to let Nvidia compete with Chinese chip companies, arguing that the products aren’t nearly as good as Nvidia’s best hardware and won’t push China ahead of the U.S. in the AI race.
The government is also getting a 25% cut of Nvidia’s sales, part of the deal that is also necessitating a thorough security review and unusual shipment process. Those steps are needed so the 25% is charged like a tariff when chips are sent from Taiwan, where they are manufactured, back to the U.S. before they are exported to China.
Skeptics say the new rules illustrate the security risks inherent in approving the exports and that following them to the letter of the law might mean no shipments get approved. The rules are based on Chinese tech giants like Tencent that buy Nvidia chips, which would lead to security guarantees that could prove toothless given those companies have been linked to the Chinese military, some said.
The rules also include customer identity verification and protections against unauthorized customers using cloud computing to remotely access AI chips. A bill focused on limiting remote access passed the House of Representatives on Monday.
The context
Administration officials and lawmakers are racing to impose security measures on the chip industry. Lawmakers have proposed bills with some provisions similar to those the administration is implementing to make sure U.S. customers have the chips they need before products are exported and codifying rules ensuring customers don’t have ties to U.S. adversaries or their militaries.
Despite those concerns, Trump has sided with Nvidia Chief Executive Jensen Huang in allowing exports to China and countries with close ties to Beijing like the United Arab Emirates, raising the stakes of the chip export debate.
Write to Amrith Ramkumar at amrith.ramkumar@wsj.com
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