US President Donald Trump explained his decision to allow Nvidia to sell its H20 graphics processing unit (GPU) to China on Monday by describing it as obsolete.
More specifically, Mr Trump was asked about making a deal with Nvidia for the US government to receive a 15 per cent cut of sales to Beijing.
“I deal with Jensen [Huang], who is a great guy,” Mr Trump said, referring to Nvidia's chief executive and founder.
“The chip that we're talking about, the H20, it's an old chip and China already has it … but it's obsolete and it still has a market.”
That begs the question, however, why there is so much demand from China for the H20, and why some elected officials and analysts are so concerned that Mr Trump will allow the chip to be sold to the country.
By most standards, Mr Trump's description of the H20 as obsolete is incorrect – to describe a technology, particularly a piece of hardware like the H20 GPU, as obsolete is to imply that it's no longer supported by the tech world, making it completely impractical to use within an existing technology ecosystem.
That's not the case with the H20, which was designed several years ago by Nvidia to comply with US regulations seeking to prevent powerful AI technologies from being used by countries it views as adversaries.
In recent weeks, a group of Democratic senators sent a letter to White House officials criticising the move to allow the resumption of H20 sales to China, claiming that because of the GPU's improved power-efficiency and high-bandwidth memory chips, “many PRC [People's Republic of China] firms reportedly prefer the H20 to other controlled chips”.
That's hardly an indication a GPU design is obsolete.
Late in July, in response to The National's inquires about concerns about the H20 being sold in China, Nvidia did not exactly describe the GPU as obsolete either.
“The H20 helps America win the support of developers worldwide, promoting America's economic and national security,” the statement read, emphasising the chip's deliberately modest attributes.
“It does not enhance anyone’s military capabilities, and the US government has full visibility and authority over every H20 transactions.”
Some Republicans have also described Nvidia's H20 as still relevant.
Representative John Moolenaar, who chairs the House Select Committee on the Chinese Communist Party, recently opposed resuming exports of the H20 to China.
“The H20 is a stark improvement over what the Chinese can indigenously produce at scale,” he said during a speech at Purdue University's Krach Institute for Tech Diplomacy.
“When, not if, these chips are diverted to [China's] People's Liberation Army supercomputer, they will substantially upgrade their ability to run advanced AI models.”
H20 paranoia abounds
Regardless of whether or not one considers the H20 to be obsolete, there is a tremendous amount of speculation surrounding the chip, with some of the paranoia coming from China, where there is demand for it.
This month, Nvidia sought to debunk reports that claimed some of its chips had a backdoor kill switch, to blunt any misuse that might compromise national security.
Some members of the US Congress have even sought to make it mandatory for certain chips to contain kill switches.
“Nvidia GPUs do not and should not have kill switches and backdoors,” a blog post from the company read.
“No kill switches, and no spyware … that’s not how trustworthy systems are built – and never will be.”
Despite those assurances, however, recent reports have indicated China still has concerns.
According to Bloomberg, Chinese officials are telling various companies within the country to not use Nvidia's H20 over fears that the chips might be compromised and vulnerable to being exploited.
The Chinese embassy in Washington has not yet responded to The National's requests for comment.
Trump praises Nvidia's Blackwell architecture
Despite ample conjecture about the H20 coupled with the varying opinions about Nvidia's sales of it to China, during Mr Trump's news conference on Monday, he made clear that the company's other GPU offerings would likely not be exported to China anytime soon, at least not without a few changes.
Mr Trump said Nvidia's highly touted Blackwell GPUs would need to be toned down before he would consider allowing them to be sold in China.
“It's super-duper advanced and I wouldn't make a deal with that,” he said, before quickly giving himself some wiggle room.
“Although it's possible that I would make a deal if they enhanced it in a negative way.”
Mr Trump said based on his conversations with Mr Huang, he's impressed with the Blackwell platform, adding that in terms of processing power, none of Nvidia's competitors have it, “and they probably won't for five years”.
As for the 15 per cent cut that the Trump White House wants for the H20 sales to China, on Tuesday, press secretary Karoline Leavitt said similar approaches might be applied to other companies and products, although she said specifics were still being worked out by the Department of Commerce.
Some have questioned the constitutionality of the move, referring to it as a "reverse tariff".
