By Karen Freifeld and Alexandra Alper Dec 9 (Reuters) – China hardliners and Democratic lawmakers slammed the Trump administration for its decision to allow Nvidia to ship its second-most advanced AI chip to China, citing concerns that Beijing could harness the technology to supercharge its military and ultimately bankrupt and replace Nvidia. Republican President Donald Trump announced the move to allow H200 sales to China in a social media post on Monday, adding that the U.S. would collect a 25% fee on such sales, and that AMD and Intel would receive approval to sell similar chips there. The decision "puts our competitive edge up for sale, all for a 25% cut of chip exports," said Brad Carson, a former Under Secretary of the Army. "When China starts supplying their military with AI built on U.S. chips, the world will regret this decision." The White House, the Commerce Department and the Chinese embassy in Washington did not immediately respond to requests for comment. The move is the most dramatic example yet of Trump's new push toward relaxing restrictions on sales of advanced American AI technology to China, as he seeks expanded overseas markets for U.S. companies. He also faces Beijing's imposition of export controls on rare earth minerals, key ingredients for manufacturing a vast array of technology in the U.S. and abroad. It marks a dramatic reversal from his first term, when Trump drew international attention by cracking down on Chinese access to U.S. technology, citing claims that Beijing steals American intellectual property and harnesses commercially obtained technology to bolster its military, which Beijing denies. But the administration, led by White House AI czar David Sacks, now argues that shipping advanced AI chips to China discourages Chinese competitors like Huawei from redoubling efforts to catch up with Nvidia and AMD's most advanced chip designs. If, in five years, AI chips made by sanctioned Chinese telecom equipment giant Huawei were everywhere, "that means we lost … We can't let that happen," Sacks said at an event in January. But many in Washington disagree. Stewart Baker, a former Homeland Security and National Security Agency official, said the notion that the U.S. can keep China dependent on U.S. chips by letting it have the H200 is “a delusion.” “There’s no world in which they are not going to continue to press as hard as possible to have a domestic industry that will ultimately have as its goal the bankruptcy of Nvidia and the dependence of the United States on Chinese AI,” Baker said. Democratic lawmakers echoed those views. Senator Ron Wyden accused Trump of getting "taken to the cleaners by China yet again," arguing that "every American will be less safe because of his terrible deal on AI technology." Meanwhile, U.S. Representative Raja Krishnamoorthi described the move as a "profound national security mistake and a gift to our top strategic competitor." But some China hawks see the impact as more limited, including James Mulvenon, a Chinese military expert who authored a report that helped convince the first Trump administration to sanction Chinese chip manufacturer SMIC in 2020. "Regardless of this decision, the Chinese government has made it clear that it is not their long-term strategic goal to be dependent on Nvidia or any other Western technology, so these gains will likely be transitory,” he said. (Reporting by Alexandra Alper in Washington and Karen Freifeld in New York; Additional reporting by Michael Martina in Washington. Editing by Chris Sanders, Mark Potter and Matthew Lewis)
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