Commerce Secretary Howard Lutnick told lawmakers at a hearing on Tuesday that Nvidia must accept the detailed licensing conditions attached to sales of its second-most advanced artificial intelligence processor to China. The chips in question are known as the H200.
"The license terms are very detailed. They’ve been worked out together with the State Department, and those terms Nvidia must live with," Lutnick said, describing the conditions as the product of interagency negotiation.
When pressed about whether he trusted Chinese authorities to adhere to constraints on how the H200 would be used, Lutnick declined to make that judgment himself and instead deferred to President Donald Trump. He told lawmakers that the management of the complex U.S.-China relationship is a matter handled by the president and the secretary of state, saying they "help us and instruct us and we follow their lead."
A report last week said Nvidia has not accepted proposed conditions on the use of its chips in China, including a Know-Your-Customer requirement meant to ensure that China’s military does not gain access to the devices. The Know-Your-Customer provision was cited as a specific point of contention in ongoing discussions.
Lutnick further framed certain strategic issues as falling directly to the president. "We all are familiar with the weaponization of critical minerals and rare earths and magnets, and so the resolution of those topics is really with the president," he added.
The authorization for Nvidia to sell prized AI processors to China followed a diplomatic engagement between Presidents Trump and Xi Jinping in South Korea in October. That meeting produced a trade truce that included a U.S. commitment to delay by one year a rule that would have blocked shipments of American technology to thousands of Chinese firms.
At the hearing, Lutnick emphasized that the licensing framework governing H200 exports is specific and collaborative between Commerce and the State Department, and indicated the department will implement the policy direction set by the president and the secretary of state.
Key points
- Commerce Secretary Howard Lutnick said Nvidia must abide by detailed license terms negotiated with the State Department covering H200 sales to China.
- A recent report indicated Nvidia has not accepted proposed conditions, including a Know-Your-Customer requirement intended to prevent access by China’s military.
- Permission to sell the chips followed a U.S.-China trade truce in South Korea that included a one-year delay of a rule restricting technology shipments to many Chinese firms.
Risks and uncertainties
- Uncertainty whether Nvidia will agree to the proposed usage conditions, which could affect commercial shipments and supplier strategies in the semiconductor sector.
- Reliance on executive-level diplomatic decisions leaves policy on critical materials and export controls dependent on the president’s direction, creating potential volatility for markets tied to advanced chips and related supply chains.