Nvidia’s H20 Chip Sales Resume Amid Rare Earth Negotiations: What It Means for Tech and Startups

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Nvidia's H20 Chip Sales: Tied to Rare Earth Trade Talks

Nvidia has reversed its decision to withdraw from China and is now seeking to renew sales of its H20 AI chips to the Chinese market. This shift closely follows major developments in ongoing trade negotiations between the United States and China concerning rare earth elements (REEs), critical materials used in many advanced technologies.

Just last month, Nvidia announced plans to largely discontinue business in China due to regulatory hurdles. However, the company's application to resume H20 chip sales coincides with high-stakes discussions about the export and supply of REEs—resources where China has dominant mining capacity. These elements, such as lanthanum and cerium, are vital for manufacturing technologies ranging from electric vehicle batteries to mobile phones.

The US-China Tech Trade Standoff

US Commerce Secretary Howard Lutnick recently confirmed that Nvidia's intentions are directly linked to rare earth trade negotiations. Simultaneously, fellow semiconductor giant AMD is preparing to reintroduce its MI308 AI chips in China, suggesting a wider reopening by US chip makers if trade terms evolve favorably.

However, this resumption of advanced AI chip sales is far from universally welcomed. Some US policymakers have voiced concerns that these moves could weaken export controls and hand strategic capabilities to geopolitical rivals. Congressman Raja Krishnamoorthi characterized the decision as a significant national security risk and called it inconsistent with past US policy stances.

Secretary Lutnick countered these concerns, clarifying that China would only access Nvidia’s "fourth-best" chip—addressing fears of top-tier tech transfer. Meanwhile, rumors have circulated that Nvidia may design entirely new chips aimed specifically at the Chinese market, as a way to remain compliant with evolving export regulations.

Regulatory Uncertainty & Global Chip Trade

US export rules for AI chips remain in flux. The Trump administration rescinded the Biden-era AI Diffusion Rule in May, and as of now, formal policy updates are pending. This uncertainty adds additional complexity for tech companies operating internationally. In parallel, the US government is reportedly weighing further export restrictions not only to China but also to countries like Malaysia and Thailand—nations flagged as potential alternate routes for restricted chip technology.

Governments are already moving: Malaysia, for instance, mandated new trade permits for US-made AI chips this week to stay in compliance with international regulations and reduce the risk of illicit re-exports.

Deep Founder Analysis

Why it matters

This development is strategically relevant for founders and tech startups because it marks a decisive moment in the US-China technology standoff. Supply chain resilience, access to essential hardware for AI and computing, and regulatory risk management are no longer issues for just Fortune 500s—startups building in AI, robotics, or hardware must now factor geopolitics directly into their go-to-market plans. The shift signals that global tech competition is being actively shaped by government negotiations, not just private innovation.

Risks & opportunities

The main risks involve sudden regulatory shifts that could cut off access to vital chipsets or supply chains—jeopardizing product roadmaps or entire business models, especially for startups with global ambitions. On the other hand, market opportunities may arise for startups offering supply chain transparency solutions, alternative materials development, or international compliance-as-a-service. Historically, tech trade barriers have spurred creative sourcing solutions and alternative technology platforms (e.g., Huawei's chip R&D after US sanctions).

Startup idea or application

This evolving scenario is ripe for a startup focused on dynamic supply chain analytics and scenario planning for AI-centric companies. Imagine a SaaS platform that forecasts regulatory changes, maps chip/REE supply chains, and simulates their impact on custom hardware portfolios so founders can proactively mitigate risk and optimize global strategy. Such a tool would be instrumental for any company navigating the complex intersection of deep tech and international trade.

Further Reading

Explore related stories for deeper insight:

• Hugging Face Launches Reachy Mini: Open Source Robots for Developers and AI Innovators
• Meta’s 5GW AI Data Center: Powering the Next Wave of Artificial Intelligence
• Meta Patches Major AI Privacy Flaw That Exposed User Prompts and Responses
• Windsurf Leadership Joins Google as OpenAI Acquisition Collapses: What It Means for Startups

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