If China thinks that AI is very important and that US is winning the AI race, it will have very strong incentive to start the war with Taiwan which has a chance to escalate to WW3. Thus selling chips to China lowers chances of nuclear war.
This reduces x-risk, but one may argue that China is bad in AI safety and thus total risk is increasing. However, I think that equilibrium strategy when several AGIs are created simultaneously lowers chances that a single misaligned AI takes over the world.
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1https://www.lesswrong.com/posts/sT6NxFxso6Z9xjS7o/nuclear-war-is-unlikely-to-cause-human-extinction
If the arguments in this article are correct, then nuclear war, unless it leads to the militarization of AGI, is unlikely to trigger an extinction risk.
Regardless of whether China acquires the H200, and perhaps regardless of their understanding of AI's importance, they will attempt to retake Taiwan: public sentiment, ideology, and the fact that reclaiming Taiwan would permanently establish China's semiconductor advantage over the US. China's leadership has long recognized the critical importance of securing advanced chip supplies.
Apparently not even Xi thinks it's a good idea!
https://www.ft.com/content/c4e81a67-cd5b-48b4-9749-92ecf116313d
AI is the most important thing about the future. It is vital to national security. It will be central to economic, military and strategic supremacy.
This is true regardless of what other dangers and opportunities AI might present.
The good news is that America has many key advantages in AI.
America’s greatest advantage in AI is our vastly superior access to compute.
We are in danger of selling a large portion of that advantage for 30 pieces of silver.
This is on track to be done against the wishes of Congress as well as most of those in the executive branch.
Who does it benefit? It benefits China. It might not even benefit Nvidia.
Doing so would be both highly unwise and highly unpopular.
We should not sell highly capable Nvidia H200 chips to China.
If it is too late to not sell H200s, we must limit quantities, and ensure it stops there. We absolutely cannot be giving away other future chips on a similar delay.
The good news is that the stock market reaction implies this might not scale.
The Announcement
Here it is, exactly as he wrote it on Truth Social:
The ‘conditions that allow’ clause could be our out to at least mitigate the damage here, since no these sales would not allow for continued strong national security.
I believe this would, if it was carried out at scale without big national security conditions attached, be extremely damaging to American national interests and national security and our ability to ‘beat China’ in any meaningful sense, in addition to any impacts it would have on AI safety and our ability to navigate and survive the transition to superintelligence.
This is happening despite strong opposition from Congress, what looks like opposition from most of those in the executive branch, deep unpopularity among experts and the entire policy community and the strong advice of America’s strongest AI champions on the software side, and unpopularity with the public. The vibes are almost entirely ‘this is a terrible decision, what are we even doing.’
The only ways I can think of for this to be a non-terrible idea are either if the Chinese somehow refuse the chips in which case it will do little harm but also little good, or (and to be fully clear on this possibility: I have zero reason to believe this to be the case) that H200s have some sort of secret remote control or backdoor.
I presume this decision comes from a failure by Trump to appreciate the strategic importance, power and cost efficiency of the H200 chips, combined with aggressive pushing of this from those including David Sacks who have repeatedly put private industry interests, especially those of Nvidia, above the interests of America.
How Bad Would This Be?
Right now we have a huge compute advantage. This gives a lot of that away.
Selling H200s would be way, way less bad than selling China the B30A.
Selling H200s would be way, way worse than selling China the H20.
IFP dives into the technical specifications so you don’t have to. If you are taking this issue fully seriously I encourage you to read the whole thing.
I will summarize.
That last point is important. There is demand for as many chips as we can manufacture. Every time we task as fab with producing an H200 to sell to China, it could have produced a chip for America, or sold that H200 to America.
So is our massive compute manufacturing advantage. It’s big:
How much would H200 exports erode our compute advantage? Quite a lot.
Is There A Steelman Case For This Other Than ‘Trade Always Good’?
Essentially no.
The vibes were universally terrible. Nobody wants this. Well, almost no one.
If you think that AI is not as important as Dean’s description, or not as important on a relatively short time frame, and you’re thinking about these questions seriously, mostly you still oppose selling the H200s, because the reasons to not do this are overdetermined. It’s a bad move for America even if we know that High Weirdness is not coming within a few years and that AI will not pose an existential risk.
‘Trade is generally good’ is true enough but this is very obviously a special case where this would not be a win-win trade, as most involved in national security discussions agree, and most China hawks agree. At some point you don’t sell your rival ammunition.
The default attempted steelman is that this locks China into Nvidia and CUDA and makes them dependent on American chips, or hurts their manufacturing efforts.
Except this simply is not true. It does not lock them in. It does not make them dependent. It does not slow down their manufacturing efforts.
There are those who say ‘this is good for open source’ and what they mean is ‘this is good for Chinese AI models.’ There is that, I suppose.
The other steelman is ‘the American government is getting 25%.’ Trump loves the idea of getting a cut of deals like this, and this is better than nothing in that it likely lowers quantity traded and the money is nice, but ultimately 25% of the money is, again, chump change versus the strategic value of the chips.
Semafor tries to present a balanced view, pitching the perspective of H200s as a ‘middle ground’ between H20s and B30As and trotting out the usual strawman cases, without addressing the specifics.
One certainly hopes this isn’t being done to try and win other trade concessions such as soybean sales. Not that those things don’t matter, but the concessions available matter far less than the stakes in AI.
Compute Is A Key Limiting Factor For China and Chinese Labs
In particular, compute is a key limiting factor for DeepSeek.
DeepSeek has made this clear many times over the past two years.
DeepSeek recently came out with v3.2. Their paper makes clear that this could have been a far more capable model if they had access to more compute, and they could be serving the model far faster. DeepSeek’s training runs have, by all reports, repeatedly run into trouble because of lack of compute and attempts to use Huawei chips.
This extends to the rest of the Chinese model ecosystem. China specializes in creating and using models that are cheap to train and cheap to use, partly because that is the niche for fast followers, and also largely because they do not have the compute to do otherwise.
If we gave the Chinese AI ecosystem massive amounts of compute, they would be able to train frontier models, greatly increasing their share of inference. Their startups and AI services would be in much better positions against ours across a variety of sizes and use cases. Our commercial and cultural power would wane.
Compute is the building block of the future. We have it. They want it.
Our advantage in compute could rapidly turn into a large disadvantage. China’s greatest strength in AI is that it has essentially unlimited access to electrical power. If allowed to buy the chips, China could build unlimited data centers and eclipse us.
What About That All Important ‘Tech Stack’?
There’s nothing new here, but let’s go over this again.
Even if you think AI is all about soft power, cultural influence, economic power and ‘market share,’ ultimately what matters is who is using which models.
Chip sales are profitable, but the money involved is, in relative terms, chump change.
The reason ‘market share of chip sales’ is touted as a major policy goal by David Sacks and similar others is the idea of what have dubbed the ‘tech stack’ combining chips with an AI model, and sometimes other vertical integrations as well such as the physical data center and cloud services. Thanks to the benefits of integration, they say, it will be a battle of an American stack (e.g. Nvidia + OpenAI) against a Chinese stack (e.g. Huawei + DeepSeek).
The whole thing is a mirage.
As an obvious example of this, notice that Anthropic is happy to use chips from three distinct stacks: Microsoft Azure + Nvidia, Amazon Web Services + Tritanium and Google Cloud + TPUs, and everyone agrees that doing this was a great move modulo the related security concerns.
There are some benefits to close integration between chips and models, so yes you would design them around each other when you can.
But those gains are relatively modest. You can mostly run inference and training for any model on any generally sufficiently capable chip, with only modest efficiency loss. You can take a model trained on one chip and run it on another, or one from another manufacturer, and people often do.
Chinese models work much better on Nvidia chips, and when they have access to vastly more chips and more compute. They can be shifted at will. There is no stack.
There is another ‘tech stack’ concept in the idea of a company like Microsoft selling a full-stack data center project, that is shovel ready, to a nation like Saudi Arabia. That’s a sensible way to make things easy on the buyer and lock in a deal. But this has nothing to do with what would happen if you sold highly capable AI chips to China.
The argument for exporting our full ‘tech stack’ to third party nations like Saudi Arabia or the UAE was that they would otherwise make a deal to get Chinese chips and then run Chinese models. That’s silly, in that the Chinese Huawei chips are not up to the task and not available in such quantities, but on some level it makes sense.
Whereas here it makes no sense. You’re selling the Nvidia chips to literal China. They’re not going to use them to run ChatGPT or Claude. Every chip they buy helps train better Chinese models, and is one more chip they have spare for export.
Selling H200s Hurts America In The AI Race
The most important weapon in the AI race is compute.
If it is so important to ‘win the AI race’ and not ‘lose to China,’ the last thing we should be doing is selling highly capable AI chips to China.
If you want to sell the H200 to China, you are not prioritizing beating China.
Or rather, when you say ‘beat China’ you mean ‘maximize Nvidia’s market share of chips sold, even if this turbocharges their labs and models and inference.’
That may be David Sacks’s priority. It is not mine. See it for what it is.
Nvidia Number Did Not Go Up That Much
Nvidia, down about 7% over the last month, did pop ~1.3% on the announcement. In the day since it’s given half of that back, with an overnight pop in between.
You might assume that, whoever else lost, at least Nvidia would win from this. The market is not so clear on that.
This leaves a few possibilities:
CNBC’s analysis here expects $3.5 billion in quarterly revenue, which would be a disaster for national security and presumably boost the stock. But then again, consider that Nvidia is capacity constrained. They can already sell all their chips. So do they want to be selling some of them with a 25% tax attached in a vainglorious quest for ‘market share’? The market might think Jensen Huang is selling out America without even getting more profit in return.
Another factor is that when the announcement was made, the Nasdaq ex-Nvidia didn’t blick, nor was there a substantial move in AMD or Intel. Selling China a lot of inference chips should be bad for American customers of Nvidia, given supply is limited, so that moves us towards either ‘this won’t happen at scale’ or ‘this was already priced in.’ I don’t give the market credit for fully pricing things like this in.
What happens next? Congress and others who think this is a no-good, very bad move for America will see how much they can mitigate the damage. Sales will only happen over time, so there are various ways to try and stop this from happening.