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Commerce secretary Howard Lutnick said the US’s reversal of restrictions on sales of chips to China followed recent trade negotiations with Beijing over rare earths.
President Donald Trump curbed exports of Nvidia’s H2O artificial intelligence chips to China in April as part of an escalation of his trade war with Beijing.
But a person familiar with the situation said the commerce department would start approving export licenses for these chips, after Nvidia on Monday said it expected to restart sales to Chinese companies.
Lutnick said on Tuesday the loosening of export controls had been part of recent trade talks between American and Chinese officials in London and Geneva as the two sides met in a bid to de-escalate trade tensions.
The US has pushed China to ease export controls on seven rare earth elements and magnets that are critical to the production of a range of defence and clean energy technologies.
“In the magnets deal with the Chinese, we told them that we would start to resell them,” Lutnick said on CNBC.
Lutnick added that the chip being sold to China, which was tailored to comply with 2022 Biden-era controls aimed at preventing the sale of the most powerful chips to Chinese companies, was the company’s “fourth best” chip.
“We don’t sell them our best stuff, not our second-best stuff, not even our third best,” Lutnick said.
He added that it was in US interests to keep Chinese companies using American technology.
“You want to sell the Chinese enough that their developers get addicted to the American technology stack. That’s the thinking.”
Trump announced in June that the US had “signed” a trade deal with China, but neither side has published the written agreement. Both sides agreed to reduce tariffs on the other for 90 days.
A senior White House official indicated last month that Trump could ease restrictions on selling chips to China if Beijing agreed to speed up the export of rare earth minerals.
The easing of restrictions is a big win for Nvidia, whose chief executive, Jensen Huang, met Trump at the White House this month to warn that America would risk forfeiting its leadership in AI to Chinese companies if it cut off exports of critical technology.
In a visit to Beijing on Tuesday, Huang told reporters it was “important” for American companies to “compete and serve the market” in China.
The H20 chip is less powerful than Nvidia’s top-of-the-range chips but was bought by some of China’s leading AI players, including ByteDance, Alibaba and Tencent, prior to the restrictions.
Nvidia shares closed 4 per cent higher on Tuesday.
Rival chip designer AMD, which was also hit by restrictions in April, said it had been told by the commerce department that licenses to export its MI308 chip would “be moving forward”.