With this week’s announcement that Nvidia may resume controlled sales of its H200 processors to approved Chinese buyers, conditioned on a substantial twenty-five percent return to the U.S. government, Donald Trump demonstrated an instinct for statecraft grounded in the national interest. Complete disengagement from China’s technology sector merely accelerates China’s further development of its own advanced chips. Conversely, America’s structured participation in Asian markets – under terms that materially benefit Washington – ensures the U.S. remains at the center of the global semiconductor ecosystem by denying Beijing’s technological dominance over the region.
Reports that China’s president Xi Jinping has reacted favorably to the proposal indicate the White House may finally be converting latent leverage into strategic gains, but only if Washington adheres to Ronald Reagan’s timeless admonition to trust but verify the commitments the People’s Republic now signals.
Governments around the world are laying the foundations for what will become the defining infrastructure of the 21st century. These are hardly the industrial landmarks of bygone eras – highways, refineries, and deep-water ports. The new race hinges on Artificial Intelligence (AI) chip factories– the production of dense computational components that transform electricity, data, and algorithms into the most valuable strategic asset of our time – machine intelligence. The nations that master this infrastructure will dictate the terms of global innovation, economic growth, and security cooperation for decades.
Where detractors err is in their comparison of AI chips to precursor materials used to make, say, biological weapons or nuclear warheads. Yes, the U.S. should keep Iran from acquiring centrifuges necessary to refine weapons-grade plutonium and chemicals needed to build bio-bombs. As U.S. chipmaker Nvidia recently noted, “AI is not an atomic bomb. No one should have an atomic bomb. Everyone should have AI.’
The United States retains a significant advantage in the AI chip race. American firms design the most capable GPUs, build the software frameworks that push the frontiers of research, and operate the cloud platforms that anchor the digital economy. By almost any measure, the U.S. ecosystem remains unmatched. But Washington’s current, self-imposed export restrictions threaten to shut out one of the world’s largest developer markets– China and greater Asia – from even mid-range, commercially viable chips. Simply put, what was once a targeted set of national security measures no longer reflects strategic reality.
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This is because nearly half of the world’s AI developers are based in China, and their choices will help determine which platforms and frameworks dominate the global market. NVIDIA CEO Jensen Huang is correct that if the United States cedes this developer ecosystem to competitors, “it will be almost impossible to get it back.” Technological ecosystems become self-reinforcing once they reach scale, as China’s rapid 5G deployment vividly demonstrated. Nations, vendors, and developers eventually align around whichever standard is winning. Losing an early lead jeopardizes far more than market share – it risks long-term strategic influence.
Restricting high-end GPUs through U.S. export controls was intended to slow China’s ascent in artificial intelligence. That objective may have been feasible several years ago; it is not today. China already has a resilient domestic AI stack, from Huawei’s inference-optimized chips to rapidly improving open-source foundational models like DeepSeek R1. Today, China is not simply closing the gap – it’s exporting AI alternatives abroad. Even industry leaders now concede that China has sophisticated AI components on offer for sale, making the original rationale for blanket restrictions increasingly irrelevant.
The economic costs to the United States are equally significant. American semiconductor firms are losing billions in annual revenue – money that could otherwise fuel research, expand domestic employment, and fortify the innovation base critical to national security. In a sector where scale determines survivability, cutting off access to one of the largest markets on the planet is an unforced strategic error. At a time when the U.S.is working to strengthen its manufacturing base and narrow its trade deficit, sidelining high-value exports undermines the very goals policymakers claim to prioritize.
It is reassuring that the White House looks set to pursue a more calculated path – one grounded in strategic realism rather than ritualized restrictions based on an antiquated, Cold War mindset. Allowing controlled, licensed exports of non-cutting-edge chips such as Nvidia’s H200 will enhance, not diminish, U.S. national security. When Chinese developers, researchers, and institutions build atop American frameworks, cloud APIs, and tools, Washington gains influence, visibility, and leverage. When developers migrate to alternative ecosystems, our influence evaporates. Winning the global AI competition requires more than protecting advanced hardware; it requires deploying the American technology stack abroad and ensuring the world continues to build on U.S. platforms.
This moment is especially pivotal because nations are choosing their long-term AI partners now. As Huang has observed, “Every industrial revolution begins with infrastructure. AI is the essential infrastructure of our time, just as electricity and the internet once were.” Toward that end, China is exporting its AI models and chips across Southeast Asia, Africa, and the Middle East. Should the U.S.abstain from the world’s fastest-growing markets, companies such as Huawei will fill the void and American standards will lose their gravitational pull.
China has poured resources into its own AI-chip ecosystem, standing up domestic supply chains, and engineering substitutes for the hardware it can no longer import. Far from slowing its progress, the restrictions only accelerated China’s push for technological self-reliance. By denying Chinese firms access to Western chips, Washington encourages precisely the outcome it hopes to avoid: the rapid expansion of China’s homegrown capabilities and a long-term erosion of the leverage that export controls presume to provide.
Preserving American leadership in the age of machine intelligence requires engagement, not isolation and competition by performance, not constraint. If Washington proceeds prudently, it can ensure that the world’s emerging AI factories are built on American foundations – and that the next era of technological power reflects U.S. strengths, values, and interests.
By - Ivan Sascha Sheehan is a professor of Public and International Affairs and the incoming interim dean of the College of Public Affairs at the University of Baltimore. The views expressed are the author’s own. Follow on X @ProfSheehan
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