Trump weighs allowing downgraded Nvidia Blackwell chips to China

President Donald Trump has signaled openness to allowing Nvidia to sell a downgraded version of its most advanced Blackwell AI chip to China, potentially reducing performance by 30-50%. This development comes as part of ongoing negotiations over semiconductor exports, with Nvidia and AMD already agreeing to pay the U.S. government a 15% revenue cut from Chinese chip sales in exchange for export licenses.

What you should know: Trump indicated he would consider approving a “somewhat enhanced — in a negative way” Blackwell processor for Chinese markets.

• The president said he plans to meet with Nvidia CEO Jensen Huang specifically about the Blackwell system, which he called the “latest and the greatest in the world.”
• Any downgraded Blackwell approval “would be a big deal going forward,” according to Paul Triolo, partner at advisory firm DGA-Albright Stonebridge Group.

The revenue-sharing deal: Nvidia and AMD have agreed to unprecedented terms with the U.S. government for Chinese market access.

• Both companies will pay a 15% cut of revenue from chip sales to China in exchange for export licenses.
• Trump initially requested a 20% cut but settled on 15% after negotiations with Huang.

The strategic rationale: Industry experts see the potential downgraded chip sales as part of a broader technological dependency strategy.

• “The idea here is to addict China to substandard, or non-cutting edge technology,” Triolo explained.
• Huang has argued that cutting off China from American chips would simply allow domestic competitors like Huawei to fill the void, making Chinese firms less dependent on U.S. technology.

China’s current situation: Chinese companies are navigating a complex transition as existing chip stockpiles dwindle.

• Firms stockpiled Nvidia’s A100 and H100 chips before export restrictions took effect in 2022 and 2023, and are still using them to train AI models.
• “We are in sort of a transition point of running out of those stockpiles of earlier acquired Nvidia GPUs,” Triolo noted.

The Huawei factor: China’s domestic chip development continues advancing despite export restrictions.

• Huawei, a Chinese tech giant, is developing its Ascend series processors as an Nvidia alternative, though current versions aren’t yet fully competitive.
• Triolo expects Huawei to release a new version of its 910 processors next year that will be “more competitive with Nvidia.”

What remains unclear: Key details about the potential downgraded Blackwell chips haven’t been specified.

• The exact capabilities of a downgraded Blackwell system for China remain undefined.
• Whether such chips would be suitable for training advanced AI models is still uncertain.