The Trump administration will allow semiconductor firm Nvidia to sell its previously restricted advanced H20 chips to China as part of an agreement Washington and Beijing reached during trade talks in recent months, Treasury Secretary Scott Bessent said.
All shipments of U.S.-origin advanced AI semiconductors will require an export license from the Malaysian government when moving through Malaysia, the country announced July 14, a move that further aligns Malaysia with U.S. efforts to prevent the diversion of sensitive chips to China.
Senate Banking Committee ranking member Elizabeth Warren, D-Mass., and Sen. Jim Banks, R-Ind., a member of the committee, urged Nvidia CEO Jensen Huang July 11 to avoid undermining U.S. export restrictions during his upcoming trip to China to discuss AI cooperation.
The U.S. government, together with industry, needs to set clearer guardrails around sensitive technology shipments destined to China, two panelists said during an event on export controls last week. Another panelist questioned whether the Trump administration is willing to set tougher rules, saying Beijing appears to have recently gained extra leverage and adding that the U.S. has for years failed to deter companies from flouting restrictions against China.
The Senate Appropriations Committee endorsed a proposal July 10 to urge the Bureau of Industry and Security to create a program to provide financial rewards to those who report illegal exports of advanced semiconductors and AI-enabling chips to “foreign adversaries.”
Microsoft President Brad Smith this week warned the U.S. against introducing new export controls that could prevent American companies from becoming the world’s leading exporters of AI services, suggesting the Trump administration should instead look into expanding or replicating the AI deal it announced in May with the United Arab Emirates.
Companies should expect the Bureau of Industry and Security to continue a steady pace of penalties against export violators, particularly for cases involving semiconductors and other advanced technologies, said Gregory Dunlap, the former special agent in charge of the agency’s Los Angeles field office. And if Congress grants the agency’s request for more funding, Dunlap said, BIS could soon have the resources to more quickly carry out investigations and probe a greater number of exporters.
U.S. and Chinese officials said the two countries are still on pace for Beijing to ease its restrictions over rare earths and for Washington to lift its countermeasures, including export controls.
Malaysia said it's looking into reports that a Chinese company is using servers with Nvidia chips and artificial intelligence chips for large language models training in Malaysia. The country's Ministry of Investment, Trade and Industry is "still in the process of verifying the matter with relevant agencies if any domestic law or regulation has been breached."
As the Bureau of Industry and Security asks for more funding from Congress to improve its enforcement and technological capabilities, the agency could benefit from more information about controlled exports leaving third countries, said Matt Borman, a former senior BIS official. He also stressed the importance of the U.S. carefully calibrating any new export controls, and said its current semiconductors restrictions have successfully slowed China from producing the most advanced chips.