TAIPEI (Taiwan News) — The US has approved Nvidia’s export of H200 chips to China on the condition that the TSMC-made processors undergo a special security review.

The H200 AI chips are primarily produced in Taiwan, but must be shipped to the US for vetting before being sent to China, per The Wall Street Journal. The US government will collect a 25% import duty while avoiding any export tax issues, which are prohibited under the constitution.

Chris McGuire, a senior China and technology fellow at the Council on Foreign Relations, told the newspaper, “The interests here are not really those of the country, they are those of Nvidia.” 

McGuire and other analysts who support chip export controls to China argue that large-scale exports of H200 chips to China could undermine the US’ AI computing advantage.

US officials, including AI Czar David Sacks and Nvidia CEO Jensen Huang, argue that China’s chip industry is advancing rapidly, and Nvidia must compete with companies like Huawei. During a CSIS event on Dec. 3, Huang said, “In the case of China, we shouldn’t concede the entire market to them.” 

Nicholas Ganjei, the US attorney for the Southern District of Texas, on Monday said, “The country that controls these chips will control AI technology; the country that controls AI technology will control the future.” Nvidia maintains it has seen no evidence of large-scale chip smuggling. 

Several lawmakers worry that exported chips could strengthen China’s military and threaten US security. Huang disagrees, saying China’s military would avoid using US-made chips for its own security considerations.