U.S. plans to sell advanced AI chips to China amid economic and security concerns

Geoff Bennett:

In a move with major implications for national security and the global race to dominate artificial intelligence, President Trump yesterday announced he will allow Nvidia to sell its H200 computer chip — that's an advanced chip used for developing A.I. — to China.

In a TRUTH Social post, the president said the sales would move forward under conditions that allow for continued strong national security and that the deal would support American jobs, strengthen U.S. manufacturing and benefit American taxpayers.

Under the arrangement, the U.S. government would receive a 25 percent cut of Nvidia's sales to China. The decision marks a sharp reversal from the Biden administration, which had banned shipments of advanced A.I. chips to China, and from President Trump's own earlier stance, when he followed a similar ban on national security grounds.

For perspective, we're joined now by Chris Miller, author of "Chip War: The Fight for the World's Most Critical Technology." He's also a professor of international history at Tufts University.

Thanks for being with us.

Chris Miller, Author, "Chip War: The Fight for the World's Most Critical Technology": Thank you for having me.

Geoff Bennett:

So, help our viewers understand why this is happening now.

We know that Nvidia's CEO, Jensen Huang, has aggressively lobbied to lift this ban. In your view, what actually changed the president's position?

Chris Miller:

Well, I think the president was convinced that the sales of these chips would generate enough revenue both for chip companies, but also for the U.S. government, that it was in the U.S. interest.

I think there's also a belief in some quarters in Washington that, if you sell more chips to China, you can dissuade them or prevent them from trying to build up their own chip ecosystems. And those were the two primary rationales for this flip-flop on export control policy.

Geoff Bennett:

Well, lay out the core national security concerns here.

Chris Miller:

I think there are two main categories of national security concern.

First is that it's already the case that all of the world's leading militaries and intelligence agencies are using A.I. for their own purposes. You already see drones powered by A.I. flying in the skies between Russia and Ukraine. You already see intelligence agencies using A.I. to sift through information, and this is only going to continue.

And so there's a strong reason to believe that whichever country has the best A.I. capabilities for its military will have the strongest military power. That's the first reason. The second is that it's clear we're entering a new era of technology that will be defined by companies that have the most advanced A.I. capabilities.

And I think, just like there was a huge geopolitical implication driven by the fact that the U.S. had the world's largest tech firms, companies like Google and Facebook in the Internet era, well, in the A.I. era, it's going to be the same. If it's us firms that lead, the U.S. will gain a lot of leverage from that.

If it's Chinese firms that lead, it will be at the whim of the Chinese government. And so shaping the future of the A.I. ecosystem is itself something that will have not only economic, but also, I think, really substantial geopolitical implications.

Geoff Bennett:

Well, let's talk more about that, because the same day the Trump administration approved the sale of these H200 chips to China, the Trump Justice Department announced that it had shut down what it called a tech smuggling network involving these exact same chips.

And the Trump DOJ put out a statement, part of which reads this way: "These chips are the building blocks of A.I. superiority and are integral to modern military applications. The country that controls these chips will control A.I. technology. The country that controls A.I. technology will control the future."

So what does this apparent contradiction signal?

Chris Miller:

Well, look, I think the Justice Department is right in describing the importance of these chips, which is why there's been a bipartisan consensus in both houses of Congress among not just the current administration, but also the prior administration, to control the most advanced A.I. technologies.

And the Trump administration itself has been divided internally about what the right policy approach is here. And I think it's only after a lot of internal debate that the president decided to reverse his prior decisions to actually tighten controls on these semiconductors.

Geoff Bennett:

Supporters of what the president is doing here argue that the White House wants to ease trade frictions with Beijing. This is a key way to do that. They also say these H200 chips are roughly 18 months behind Nvidia's most advanced offerings.

Are either of those arguments persuasive, in your view?

Chris Miller:

Well, I think it's true that the chips under discussion are not the most advanced chips that U.S. firms can produce, but they're a lot more advanced than what China can access at scale today.

The key dynamic is that China does not have substantial volumes of chipmaking capability at the cutting-edge level that A.I. requires. In a base case today, if you look at projections for next year, the U.S. plus its partners like Taiwan and Korea will produce over 95 percent of the world's A.I. chips. China's going to produce less than 5 percent of them.

So China needs to import U.S. semiconductors to keep its A.I. companies going. It needs our chips to train their most advanced models. And so, yes, it's true these aren't the most cutting-edge, but they're better than China can get today. And so selling these chips will almost certainly enhance China's A.I. capabilities.

Geoff Bennett:

The Commerce Department still has to finalize these rules. There's pushback from Democrats and Republicans on the Hill, Democrats to include Mark Warner, the top Democrat on the Senate Intelligence Committee.

He said in a statement today: "Unfortunately, the Trump administration's haphazard and transactional approach to export policy demonstrates that it does not have any sort of coherent strategy for how we will compete with China, specifically as it relates to whose chips, tools, cloud infrastructure, and ecosystem will influence the most A.I. developers worldwide."

How much power does Congress have to stop or reshape this? Of course, Republicans controlling both chambers.

Chris Miller:

Well, Congress has thus far relegated export control policy to the executive branch. That's been a longstanding approach.

But I think we have seen a number of initiatives in Congress from Republicans, as well as from Democrats, to take back some of that authority and impose some legislative restrictions on chip exports as well. And so I will be watching carefully whether these efforts in Congress pick up steam, and they could be driven by the president's decision to loosen some of these controls.

Geoff Bennett:

Chris Miller, thanks so much for sharing your perspectives with us. We appreciate it.

Chris Miller:

Thank you.