A new bipartisan bill in the U.S. Senate threatens to put the brakes on Nvidia's efforts to sell its latest AI-training hardware to Chinese customers, even as the Trump administration mulls allowing lower-powered versions of the hardware. China is looking to restrict access to this kind of hardware too, to favor domestic chip firms, which would harden its supply chains and reduce trading turbulence. However, with no real alternatives to Nvidia's GPUs for training hardware and numerous ways to circumvent sanctions, tariffs, and trade barriers, it's hard to imagine Nvidia completely exiting the region.
Nvidia CEO Jensen Huang spent much of last week meeting with U.S. legislators, including President Trump and Republican members of the Senate Banking Committee, which oversees U.S. export control programs. Huang clearly wasn't persuasive enough, though, as now the proposed Secure and Feasible Exports Act (SAFE) bill would force the Commerce Department to halt export licenses for the sale of the latest chips to U.S. adversaries, including China and Russia, for 30 months.
This ban could cover all existing chips and anything more powerful than them developed by any of the major companies over that same period. Although it primarily targets Nvidia's Blackwell GPUs, it would also cover Nvidia's last-generation Hopper designs, AMD's graphics chips, and Google's latest TPU designs.
This is devastating news for Nvidia and many of its chip-manufacturing contemporaries. China is a massive market for hardware and AI development, but it's certainly not proven to be the most willing of markets.
Chinese authorities have spent months pushing back on the on-again, off-again availability of Nvidia hardware by encouraging its domestic companies to use domestic chip suppliers where possible. It mandates that Chinese companies use at least 50% domestically produced hardware and, more recently, has claimed that new packaging and assembly techniques can close the performance gap between Nvidia and its local producers.
Chinese chip firms have responded with gusto, too, announcing enormous plans to manufacture several times the chips they managed in 2025, as soon as next year. It's not clear if those plans will be physically possible in such a short time frame, but they're shooting for the moon nonetheless.
But even if the companies can fabricate these chips, there's no guarantee they'll be used, despite the double-ended carrot-and-stick approach of both the U.S. and Chinese authorities.
Inference is one thing, training is another
(Image credit: Huawei)
China has made major leaps in its AI hardware development over the past few years, particularly in the past year, as it's sought to build more reliable access to powerful AI hardware, while the U.S. turned the tap on and off at the whim of its mercurial commander-in-chief. These conditions have led Huawei to make tremendous advances and to design high-power systems that scale well, at the expense of efficiency.
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