The U.S. Plans to Impose Restrictions on Nvidia Sales in China

The administration of President Donald Trump is considering tightening restrictions on the sale of Nvidia’s H20 chips to China, according to sources familiar with the matter.

Discussions among Trump officials about restricting shipments of these AI chips are still in the early stages, the sources said. They also noted that the idea had been under consideration since the administration of former Democratic President Joe Biden.

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The H20 chips are designed to run artificial intelligence software while complying with existing U.S. restrictions on exports to China. Nvidia, in a statement, said it is “willing to work with the government as it pursues its own approach to AI.”

DeepSeek Shook the ‘Magnificent Seven’

Fears that China is closing the AI gap with the U.S. have intensified after Chinese company DeepSeek recently launched a free AI assistant. The company claims the assistant operates with fewer data and at a fraction of the cost of existing AI models, potentially signaling a major shift in AI investment dynamics.

DeepSeek’s unveiling of its “R1” model—designed to operate with cheaper chips and less data while maintaining the efficiency of leading AI models—triggered a historic $1.2 trillion drop in the market capitalization of U.S. and European tech stocks.

Nvidia, the leader in advanced chip manufacturing, saw its stock plunge more than 16%. While the company rebounded the next day, its stock has yet to return to the levels seen in January.

NVDA/USD

Adding to the competitive pressure, Alibaba announced its own AI model, which it claims surpasses both OpenAI’s and DeepSeek’s technologies.

Biden, who left office this month, had implemented a series of restrictions banning the export of AI chips to China and limiting their shipment to many other countries. However, some AI chips, like Nvidia’s H20, are still legally allowed to be sold in China.

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ABOUT THE AUTHOR See More
Ignacio Teson
Ignacio Teson
Economist and Financial Analyst
Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.
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