Trump’s chips offensive

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In recent years, the White House has focused primarily on finding ways to block Nvidia from selling AI chips to China.

Now it sees the world's most valuable company as key to thwarting President Xi Jinping's global ambitions.

Amid the furor over Donald Trump's move to take a cut of Nvidia and AMD's revenue from chip sales to China is a newfound appreciation of their strategic value.

By encouraging the companies to sell a scaled-down chip designed specifically for the Chinese market, the US president is hoping to check Beijing's ability to compete globally.

"We do not want the standard to become Chinese across the world, or even in China," Treasury Secretary Scott Bessent told Bloomberg TV yesterday, adding that the US wants to prevent Shenzhen-based Huawei from having a "Digital Belt and Road."

Bessent saw China's recent move to urge local companies to avoid using Nvidia's H20 processors — reported by Bloomberg earlier this week — as vindication of the approach.

"It also tells me that they are worried about the Nvidia chips becoming the standard in China," he said.

China faces a dilemma over Nvidia's H20 chip. They see it as inferior and want to compel the US to allow sales of the most advanced AI chips, something Bessent ruled out.

At the same time, local chipmakers like Huawei can't produce enough processors similar to the H20 to meet local demand.

That has Xi's government in the awkward position of discouraging the use of H20s but not outright banning them.

The fear is that Chinese companies will come to rely on Nvidia chips, hurting local chip-making innovation and prompting them to get "addicted" to American technology, to use Commerce Secretary Howard Lutnick's words.

Even as Trump finds new ways to squeeze Nvidia, China is feeling more pressure. — Daniel Ten Kate

WATCH: Bessent discusses the US-China battle for global supremacy in computer chips in an interview with Bloomberg TV.

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