Nvidia’s H20 Chip Sales to China Face Criticism Over AI Concerns

U.S. lawmakers are raising alarms over the Commerce Department’s decision to allow Nvidia (NASDAQ: NVDA) to resume sales of its H20 AI chips to China. Republican Representative John Moolenaar, chair of the House panel on China, sent a letter to Commerce Secretary Howard Lutnick on Friday, warning that the move could jeopardize America’s AI advantage and aid China’s military and censorship efforts. Moolenaar called the original export ban “the right call” and demanded details on licensing criteria, export volumes, and recipients before August 8.

The H20 chip, designed by Nvidia specifically for China after broader AI chip restrictions were imposed, is still powerful enough to be used in supercomputers and AI inference tasks, a rapidly growing segment of the chip market. According to Moolenaar, firms like Tencent and DeepSeek are already using the H20 to train large AI models, further elevating national security concerns.

The decision to permit exports follows recent U.S. negotiations with China over rare earths and magnets. While export licenses are still required, Nvidia stated it has received assurances that licenses will be granted soon.

Critics argue the reversal, initially imposed under the Trump administration and supported across party lines, weakens efforts to curb China’s AI progress. Nvidia defended the policy change, stating it benefits U.S. technological leadership, economic growth, and national security. However, Nvidia shares dipped following Moolenaar’s sharp criticism.

Moolenaar emphasized that the H20 significantly outperforms domestic Chinese chips like those from Huawei, posing a strategic risk. His public challenge to a Trump-era decision highlights bipartisan concern over AI exports to China amid intensifying U.S.-China tech tensions. A response from the Commerce Department is still pending.