Nvidia is back in business with China. So is AMD.
The Biden-era export controls on advanced AI chips used to be the cornerstone of America’s tech advantage.
But they have been partially rolled back by the Trump administration.
Nvidia’s H20 and AMD’s MI308 will soon be legally shipped to Chinese buyers again.
The news came just days after Nvidia CEO Jensen Huang met with President Trump and shortly after China resumed rare earth exports to the US.
The question isn’t whether this was a trade. It obviously was. The real question is whether it was a mistake.
A serious one. And where it could potentially lead.
Why did the US restrict AI chips in the first place?
Under Biden, Washington had drawn a clear line: China should not have access to advanced AI infrastructure.
The logic was simple. Machine learning depends on computing power.
Without access to high-end GPUs, China’s AI ambitions in military and commercial advancements would be delayed.
The US imposed restrictions on chips, chip design software, and chipmaking tools. It wasn’t a complete embargo, but it hit China where it hurt.
The initial results were real. Huawei scrambled to build around the bans. Firms like DeepSeek found workarounds, but always at a higher cost and slower speed.
Meanwhile, US firms could train frontier models at scale, keeping the edge in AI performance and efficiency.
According to Bloomberg Intelligence, Nvidia stood to lose up to $15 billion in revenue due to H20 restrictions.
That’s how much demand existed inside China for just one US chip.
The H20 was designed to be just under the export control threshold. Trump’s team changed that threshold in April.
And now, three months later, they’ve reversed course again.
What did Trump get in return?
Commerce Secretary Howard Lutnick admitted this week that the AI chip decision was part of a deal over rare earths.
In March, China halted rare earth exports to the US. Materials like neodymium and dysprosium are essential in electronics, electric motors, and even missile guidance systems.
According to reports, the US depends on China for over 80% of its rare earth processing capacity.
Trump’s team has been scrambling to secure non-Chinese sources, but those projects are years from scaling.
So when China applied pressure, Washington blinked. In exchange for resumed rare earth shipments, the US greenlit AI chip exports.
This isn’t theory. It’s confirmed. Lutnick told Reuters, “We put that in the trade deal with the magnets.”
Is this just a tactical trade or a strategic error?
Based on the headlines, both sides won. China got compute power. The US got materials. Nvidia got its lost revenue back.
But looking deeper into the deal, perhaps China is walking away with something far more valuable.
By regaining access to H20 chips, which still support Nvidia’s CUDA software ecosystem, Chinese companies are back inside the AI innovation loop. That matters more than raw chip speed.
Compatibility with the global standard stack allows Chinese firms to build, train, and scale new models without relying entirely on domestic tooling. The infrastructure lock-in is real.
This is not the highest-end chip, but it’s powerful enough. And the real goal for China isn’t matching GPT-5 this year. It’s building industrial-grade AI that scales. That’s what the H20 helps them do.
In contrast, Trump didn’t get a strategic concession. He didn’t force Huawei to give ground. He didn’t limit the buyers.
He got a temporary lifting of rare earth pressure. Beijing can turn that tap off again whenever it wants.
The US has given up leverage while China hasn’t.
What does this signal to allies and adversaries?
Trump’s decision sends two messages. One to Beijing: American tech restrictions can be negotiated away.
The other to US allies: Washington’s commitments aren’t durable.
For over two years, the US had convinced partners like Japan, the Netherlands, and South Korea to coordinate semiconductor controls.
The goal was to slow China’s technological catch-up.
Now, with a single reversal, the Trump administration has undermined that united front.
Worse, Trump has also reimposed tariffs on those same allies. Japan, South Korea, and Germany now face economic pressure from Washington just as they are being asked to help counter China.
If this continues, the US will find itself without a supply chain coalition just as China becomes more self-sufficient.
You don’t outcompete a $17 trillion economy like China’s by isolating yourself from your own allies.
Is this the beginning of a deeper problem?
This policy flip fits a broader pattern of confusion. Trump campaigned against the CHIPS Act, which is the only serious attempt to rebuild US semiconductor capacity.
His administration has cut funding to key science agencies. Diplomats and technical experts are being purged from the State Department. Immigration from top STEM-sending countries is down.
Meanwhile, China is increasing its R&D spending. According to OECD data, it is highly likely that China will surpass the US in total R&D expenditure by the end of this year.
It has already built the world’s largest pool of AI researchers. Its universities now dominate engineering rankings.
Even if Trump doesn’t want to align with China, the outcome of his policies is the same: the US is weakening its innovation base just as China is strengthening its own.
AI dominance isn’t about who sells more chips today. It’s about who controls the infrastructure of intelligence tomorrow.
Perhaps Trump is playing the wrong game, while China is capitalizing on each opportunity.
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