Amid escalating US-China trade tensions, the semiconductor industry has become a focal point of strategic competition. Export restrictions on high-tech technologies from Washington threaten to cost many American technology companies, including Nvidia, one of the world's largest markets.
As the world's leading chip manufacturer, Nvidia is under pressure to both comply with US policy and maintain trade relations with China, where demand for AI chips is booming.
In that situation, CEO Jensen Huang chose an unusual path by directly entering politics, engaging in lobbying in both Washington and Beijing. Private meetings with President Donald Trump, policymakers, and Chinese officials opened the door to reversing some export-restricting decisions.
Turning the tables
Jensen Huang, Nvidia's CEO, spent months working quietly in Washington and Beijing to protect tens of billions of dollars in chip sales from the impact of the US-China trade war.
Huang convinced President Donald Trump that restricting US chip exports to China would be counterproductive, forcing leading technology companies in the East Asian nation to develop their own alternatives. He argued that maintaining China's reliance on US technology was a wiser strategy. To bolster his argument, Huang pledged that Nvidia would invest up to $500 billion in the US.
These arguments, along with promises of massive investment, seem to have paid off. In July, the Trump administration unexpectedly allowed China to purchase Nvidia's H20 artificial intelligence chips, a product specifically designed for the Chinese market to meet previous export restrictions. This news boosted Nvidia's stock by 4%, pushing its market capitalization past the $4 trillion mark.
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Jensen Huang persuaded President Trump to authorize the sale of AI chips to China. Photo: aa . |
Beijing retaliated by greenlighting a $35 billion deal with US chip software companies that had been delayed for more than a year, while also freezing an investigation into Nvidia. Chinese officials expect Huang to continue lobbying Washington to ease export controls.
However, during a meeting at the White House in early August, Trump added a demand to Nvidia: they had to share 20% of their chip sales revenue in China with the federal government in exchange for export licenses. Huang countered, only accepting a 15% proposal. He briefed Trump on the negative impact of tariffs on US chip production, and shortly afterward, the President announced a waiver of semiconductor import tariffs for companies investing in the US.
The decision to allow China to purchase H2O marks a turning point from previous policy, which prioritized national security over business interests. Many believe this is a direct result of Huang's lobbying efforts.
Clever strategy
In Washington, Huang praised both President Trump and the Chinese government. During a visit to Beijing in July, he lauded the country's technological progress. A secretary to President Xi Jinping said Beijing appreciated Nvidia's contribution to global AI development.
However, many US lawmakers objected, fearing that Nvidia chips would empower Chinese AI companies, thereby supporting the country's military. For its part, the chip manufacturer rejected this speculation, asserting that H20 does not enhance military capabilities but only promotes global software development.
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Jensen Huang directly entered the political arena to secure a favorable deal for Nvidia. Photo: Bloomberg . |
For many years, Huang stayed away from American politics, leaving it to subordinates to handle policy-related relations. It wasn't until 2023, when faced with new export restrictions under former President Biden, that he directly engaged in lobbying. Nvidia also hired former National Security Advisor Robert O'Brien to convey concerns about the progress of Huawei and other Chinese AI companies.
In April, as the White House prepared to tighten H2O sales controls, Huang attended a fundraising dinner at Mar-a-Lago to reaffirm that selling chips to China did not threaten U.S. security and to pledge $500 billion in domestic investment. However, Elon Musk intervened, warning Trump about the risks of advanced chips falling into Chinese hands.
Unwilling to accept defeat, Huang accelerated his lobbying efforts. In May, he spent two hours meeting with the House Foreign Affairs Committee, warning that overly strict restrictions would allow Huawei to overtake them. At that point, Nvidia found allies in David Sacks, a prominent businessman, and Commerce Secretary Howard Lutnick.
Nvidia's dilemma
On July 10th, Nvidia's CEO met with President Trump at the White House, emphasizing Nvidia's need for access to the Chinese AI market and workforce. A few days later, when Huang visited Beijing, Trump announced his decision to allow the export of H20 chips. This move provoked strong reactions from Democratic lawmakers, led by Senator Mark Warner, who warned that China's commercial AI was rapidly giving its military an advantage.
Huang has traveled to Beijing three times this year to bolster the confidence of major tech companies such as Alibaba, Xiaomi, and MiniMax. Chinese engineers have nicknamed him the "magic tailor" for his ability to design chips that comply with US regulations.
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Nvidia's market share in China has fallen sharply. Photo: Bloomberg . |
Nevertheless, Nvidia's market share in China has fallen from 95% to 50% in the past four years. The Beijing authorities recently summoned Nvidia representatives, citing security risks associated with the H20 chip, as expressed by some US lawmakers. Meanwhile, Nvidia denies this, asserting that its chip cannot train large AI models like ChatGPT, but only supports "inference."
H20 currently meets the huge demand for open-source AI applications in China such as DeepSeek and Qwen. This paves the way for Nvidia to introduce its next-generation chips there, using the latest Blackwell architecture but further adapted to comply with export restrictions.
"I hope to bring more advanced chips into China than just H2O," Huang said during a recent visit to China.
President Trump also stated that he allowed the export of H2O because the US possesses superior technology, while emphasizing that the most powerful products would not be exported unless their performance was reduced.
Source: https://znews.vn/nvidia-thoat-hiem-nhu-the-nao-post1576264.html
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