Trump Open to Negotiating Downgraded AI Chips for China: Implications for Nvidia, Huawei, and US-China Tech Relations

The U.S. President, Donald Trump, has signaled a potential agreement that could allow technology giant Nvidia to export a scaled-down version of its top-tier artificial intelligence chip to China.

At a press conference on Monday, Trump expressed openness to negotiating terms with Nvidia if they could adjust the performance of their flagship Blackwell system. He stated, “There may be a deal on a slightly diminished — in a detrimental sense — Blackwell processor. ‘Possibly’ I would make such a deal, with approximately 30% to 50% reduction in its capabilities.”

Trump has scheduled a meeting with Nvidia CEO Jensen Huang to discuss the Blackwell system, which he referred to as “the world’s most advanced and innovative.”

Last month, Huang, who has been advocating for access to China’s lucrative market following restrictions, expressed interest in exporting more advanced chips to China. He argued that selling U.S.-made chips to China would make Chinese firms reliant on American technology when developing their AI systems.

Recent developments in semiconductor exports are a result of Nvidia and AMD reaching an agreement to pay the U.S. government 15% of their revenue from chip sales to China, contingent upon export licenses. Trump initially sought a 20% cut but eventually agreed to 15% following negotiations with Huang.

If approved for export, these downgraded Blackwell chips could significantly impact the tech landscape, according to Paul Triolo, partner and senior vice president for China at advisory firm DGA-Albright Stonebridge Group. Triolo stated, “The aim is to accustom China to using subpar or outdated technology.”

Nvidia’s Huang has frequently emphasized the importance of Chinese firms having access to American chips for their AI development. He contends that a lack of U.S. chip supply would leave a void that could be filled by domestic competitors like Huawei.

The United States’ export regulations regarding semiconductors have undergone modifications over the past few years. In 2022, Nvidia was barred from shipping its A100 and H100 chips to China—chips essential for training large AI models. In 2023, additional export restrictions were imposed on more Nvidia semiconductors by the U.S.

Chinese firms have been using these confiscated chips to develop their AI systems. According to Triolo, they continue to train their models using legally acquired chips.

It remains uncertain what capabilities a downgraded Blackwell system for China would possess and whether it would be capable of supporting more advanced models. In the interim, Huawei is continuing to develop its Ascend series of processors as an alternative to Nvidia.

“We are in a transitional phase of exhausting our stocks of earlier acquired Nvidia GPUs and hoping that Huawei’s new Ascend series of processors will be capable of replacing them, but they are not quite ready yet,” Triolo noted. He anticipates that Huawei will release a more competitive version of its 910 processors next year.