H20s to China + 15% with Chris Miller and Lennart Heim

Full Title

Summary

This podcast discusses the Trump administration's decision to reverse the ban on NVIDIA's H20 AI chips to China, now allowing sales with a 15% export fee, and delves into the complex geopolitical and economic arguments surrounding US advanced chip sales to China. The hosts analyze the strategic implications of this policy shift amidst ongoing US-China technological competition and trade negotiations.

Key Points

NVIDIA's H20 chip was specifically designed to comply with 2023 US export controls by maximizing uncontrolled specifications like memory bandwidth, making it highly desirable in the Chinese market despite its technical limitations compared to top-tier chips.
The Trump administration initially banned the H20 in April 2025 using fast "ISM font letters," reflecting a concern that the chip was too advanced for export, only to reverse this decision later in July to allow sales with a 15% export fee based on the perception that the H20 is "obsolete" and China already possesses similar capabilities.
Arguments against selling AI chips to China center on preventing the upgrade of China's AI ecosystem, as such chips could be used for military, intelligence, or human rights violations, thereby posing a strategic threat to the US.
Arguments in favor of selling chips suggest it retards China's domestic chip development by limiting market opportunities for local producers like SMIC and Huawei, and maintains Chinese dependency on the US technology stack, particularly NVIDIA's CUDA, which could offer future leverage.
The idea that US chip sales prevent a Taiwan conflict by maintaining China's reliance on TSMC-fabbed chips is largely dismissed as a minor factor compared to broader geopolitical and military considerations in a potential invasion scenario.
China's state media and government organs have publicly raised security concerns about foreign-produced chips like the H20, potentially as a strategic maneuver to discourage Chinese firms from buying them and to promote domestic chip alternatives like Huawei's Ascend.
The 15% export fee on H20 sales is seen as monetizing a national security decision, rather than leveraging it for strategic geopolitical concessions from China or directing funds towards enhancing US national security capabilities like tracking smuggled chips.
A proposed alternative to direct chip sales is to allow China access to US cloud computing infrastructure, which would provide the necessary compute power while retaining greater US control and leverage over how the technology is used.
Despite the Trump administration's view of the H20 as "obsolete" and potential talks of a "downgraded Blackwell" chip, any minor performance reduction is considered insignificant in the rapidly advancing, exponential nature of AI chip technology, meaning even a 50% slower new chip would still be substantially more powerful than current Chinese alternatives.
The differing public stances of US tech companies on export controls, with GPU sellers like NVIDIA being vocal and hyperscalers or AI model companies being quieter, are attributed to their reliance on specific hardware providers like NVIDIA.

Conclusion

The hosts express concern that the US policy on H20 chips appears to prioritize immediate financial gain over long-term national security implications, potentially mixing trade and security objectives inappropriately.

They emphasize the inherent uncertainty in predicting AI's future impact and the importance of minimizing national security risks by carefully controlling advanced AI technologies.

The discussion highlights the need for clear communication and well-informed decision-making by US government officials regarding critical technology exports, especially when considering potential strategic concessions from other nations.