US Making Huge Mistake, Selling Chips to China – Richard Mills

2025.08.13

America’s National Security for Sale

The US plan to allow Nvidia, AMD, and others to sell advanced semiconductors to China sends a clear message to America’s adversaries:

Even national security concerns will be ignored so long as President Donald Trump’s administration gets its cut.

https://www.project-syndicate.org/commentary/trump-nvidia-amd-deal-suggests-us-national-security-is-for-sale-by-aziz-huq-2025-08

“The upshot is that China has continued to evolve its AI capabilities, despite not having the semiconductors designed in the United States and other countries and produced at TSMC’s foundry in Taiwan.

Indeed, as The Economist points out, chips are its Achilles heel.

Which makes a recent decision by the Trump administration rather puzzling. In April it blocked the sales of Nvidia’s h20 chips to China, then reversed the decision on July 14, saying the company was permitted to resume sales. Why? The Economist explains:

The decision is a grave mistake at the worst possible time.

That is because as impressive as Chinese models have been, America’s chip controls were clearly working. When Nvidia devised the h20 to comply with an earlier set of rules, it inadvertently created a chip that was hobbled for training new AI models, but perfect for running them—a process called inference. Since exports of the H20 were banned in April, even the Chinese labs that had overcome the shortage of training chips to produce world-class AI models have been unable to access enough computing capacity to offer those models to paying customers. They have had to resort to relying on outsourced hosting and making the most of the limited quantity of AI chips produced by Huawei and other Chinese hardware firms. But the trend seems clear: without H20s, Chinese companies cannot keep up with demand.

And as AI adoption increases, having enough capacity for inference will become ever more important, making export controls even more potent. America’s ban on the export of H20s, in short, has impeded China’s progress in AI. It seems perverse for America, engaged in an arms race with China, to give up this advantage.

In April China targeted one of America’s largest chipmakers, Micron Technology. According to WECB, the Chinese government announced that Micron, which specializes in hard drives and SSDs, will be subject to a security review, citing concerns over the company’s products jeopardizing national security.

Coming for the chips

Now that the United States has opened the door to China receiving Nvidia chips, Beijing appears free to continue pursuing AI innovation that could overtake the US and its allies.”

Richard (Rick) Mills
aheadoftheherd.com

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