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Dow Jones NewsDec 9, 7:30 PM UTC
DJ Nvidia AI Chips to Undergo Unusual U.S. Security Review Before Export to China -- WSJ
By Amrith Ramkumar,Alexander Ward and Robbie Whelan
The artificial-intelligence chips that Nvidia is allowed to ship to China will undergo a special security review in the U.S. before they are exported, according to administration officials.
The unorthodox step highlights the national-security pressure on the Trump administration following its decision to allow the controversial sales.
Nvidia's H200 AI chips that are part of the deal would mainly be manufactured in Taiwan. From there, they would travel to the U.S. for a national-security review, people familiar with the matter said. The chips would then be sent on to China.
The complex supply-chain journey and unusual security review for the chips highlights the unprecedented nature of the agreement, experts said. The U.S. is supposed to receive a 25% cut from the sales and faces legal obstacles structuring the deal without it appearing like an export tax, another potential explanation for the unusual setup, they said. The Constitution forbids the U.S. government from imposing export taxes.
Some analysts say the AI-chip company is pursuing profits while national-security considerations take a back seat.
"The interests here are not really those of the country, they are those of Nvidia," said Chris McGuire, who worked on export controls in the Biden administration and is now a senior fellow for China and technology at the Council on Foreign Relations.
He and other analysts in favor of export restrictions argue that large-scale H200 sales could erode the U.S. advantage in AI-computing power. Trump administration officials, including White House AI Czar David Sacks, and Nvidia Chief Executive Jensen Huang say China's domestic chip companies are improving more quickly than much of the world realizes, meaning Nvidia needs to be in China to compete with companies such as Huawei Technologies.
"We shouldn't concede the entire market to them," Huang said last week while in Washington to discuss chip exports with President Trump and lawmakers.
It is difficult to judge the national-security implications of selling chips to China without knowing how many will be exported and who the recipients are, analysts said. The export approvals still haven't been finalized and details could change.
Trump said Monday when he announced the agreement that only approved buyers would receive AI chips, but smuggling and diversion have made it challenging to fully enforce such restrictions in the past. That same day, the Justice Department said it had charged two businessmen for trafficking export-controlled Nvidia chips, including the H200, to China and other countries.
"The country that controls these chips will control AI technology; the country that controls AI technology will control the future," said Nicholas Ganjei, the U.S. attorney for the southern district of Texas.
Nvidia has said there is no large-scale smuggling of its chips.
Several lawmakers have raised concerns that the chips could ultimately benefit the Chinese military, directly threatening U.S. national security. Huang has dismissed those concerns, saying that Beijing's forces wouldn't use U.S. chips due to its own security concerns.
Nvidia has been trying all year to assuage the concerns of national-security hawks like Secretary of State Marco Rubio to revive its China business. Other Nvidia chips have been considered for sale to China, one of which included a 15% sales cut agreement that ultimately never took effect.
Giving the government a cut of sales has presented a new challenge -- coming up with a creative structure to make it legal. Much of Nvidia's H200 manufacturing will occur in Taiwan with Taiwan Semiconductor Manufacturing, which is typical for many chip makers.
The chips will then travel from Taiwan to the U.S., giving the government the chance to classify the 25% fee as an import tax or tariff rather than an export tax, experts said. It isn't clear how a security review of the chips themselves would be substantial without further details, they said. The officials didn't provide additional specifics on how the process would work.
The arrangement also highlights how the U.S. remains dependent on Taiwan and other countries for tech products.
Write to Amrith Ramkumar at amrith.ramkumar@wsj.com, Alexander Ward at alex.ward@wsj.com and Robbie Whelan at robbie.whelan@wsj.com
(END) Dow Jones Newswires
December 09, 2025 14:30 ET (19:30 GMT)
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