In the United States, the discourse surrounding Trump’s Nvidia deal has predominantly centered on its ramifications for China's government and its ability to access cutting-edge U.S. technology. However, it's crucial to recognize that numerous other nations and companies are closely observing this deal, eager to find opportunities to engage with China as well. According to Mario Morales, a leading figure at the market research firm IDC focusing on semiconductors, the Nvidia deal indicates that U.S. national security concerns may not have been the primary driver behind export controls. He argues that various companies and countries might need to reassess their strategies and could even diverge from the policies established by the U.S. administration.
Morales raises a compelling question: if companies like Nvidia and AMD are receiving special treatment due to their financial contributions, why shouldn't other companies pursue similar strategies? This sentiment highlights the evolving landscape of global semiconductor trade and the potential for shifts in export control policies.
The Biden administration has invested significant diplomatic resources to rally its allies in limiting semiconductor exports to China. Initially, Washington mandated that manufacturers such as TSMC and Intel, which sought substantial subsidies, were prohibited from expanding advanced chip production within China. Furthermore, the U.S. urged its allies to impose their own sanctions on exports to China.
Jennifer Lind, an associate professor at Dartmouth College and an expert in international relations, explains that export controls and sanctions require a multilateral approach but often encounter challenges due to collective action problems. Many nations are reluctant to restrict their firms from exporting, especially when those firms generate substantial revenue that fuels future innovation. This hesitation can lead to a lack of adherence to export controls.
Paul Triolo, a partner at DGA-Albright Stonebridge Group, notes that during the Biden administration, officials from Japan and the Netherlands exhibited resistance to aligning closely with U.S. export controls. He suggests that U.S. allies may welcome a reduction in these controls, especially as ongoing trade negotiations between the U.S. and its partners could potentially weaken export restrictions even further.
Chinese officials might leverage these trade discussions to negotiate a rollback of chip sanctions, reminiscent of the U.S.'s agreement to grant export licenses to Nvidia and AMD in return for China easing its controls on rare earth magnets. Likewise, Japan and South Korea may raise the issue of chip controls in their trade negotiations with the Trump administration.
Another critical aspect of this situation involves the controls on transferring Nvidia GPUs. The U.S. has exerted pressure on countries like Singapore, Malaysia, and the United Arab Emirates to prevent advanced Nvidia processors from reaching China. Scrutiny intensified following the unexpected AI release by DeepSeek earlier this year, which raised questions about the acquisition of Nvidia processors that fell under export controls. DeepSeek claims it obtained its processors before the enforcement of these controls.
Currently, the only chips permitted for sale in China are Nvidia’s H20 and AMD’s MI308, neither of which represents the most advanced AI technology available. The leading processors, like Nvidia’s Blackwell chip, remain off-limits, leading to concerns about chip smuggling continuing to be a significant issue for the U.S. government. Triolo highlights that enforcement efforts will likely be inconsistent due to resource constraints within the Commerce Department, suggesting that diversions of limited GPU supplies to China via countries like Thailand and Malaysia will persist.
Triolo is particularly concerned about another vulnerability in the export control framework: Chinese firms gaining access to AI chips located in overseas data centers. He notes that there is currently no indication that the Trump Commerce Department is preparing to address this significant loophole in U.S. efforts to restrict Chinese access to advanced computing resources.
While some analysts predict a complete dismantling of the export control regime, others remain skeptical. Chris Miller, the author of Chip War: The Fight for the World’s Most Critical Technology, argues that the controls are part of a complex multinational coalition, and all parties are likely to be cautious about disrupting it given the unpredictable outcomes that could arise. He points out that many chipmakers and suppliers lack the political influence of Nvidia, which is currently the most valuable company globally.
However, despite the political clout of Nvidia, companies like TSMC and ASML hold critical roles in the semiconductor supply chain. TSMC is the exclusive manufacturer of the newest generation of advanced chips, while ASML provides the essential extreme ultraviolet lithography machines necessary for producing the smallest semiconductors. Ray Wang, a semiconductor researcher at the Futurum Group, asserts that the Trump administration is unlikely to relinquish its leverage over these key players easily.
In conclusion, as the situation evolves, the landscape of global semiconductor exports and the implications of Trump's Nvidia deal will remain critical topics of discussion among industry leaders and policymakers alike.
