Rare earth elements may be influencing NVIDIA's strategic shift regarding its stance toward China.
Following its June announcement of plans to largely exit the Chinese market, the semiconductor and AI leader has reversed course, applying to resume sales of its H20 AI chips to China.
U.S. Commerce Secretary Howard Lutnick stated on Tuesday that NVIDIA's decision to reintroduce H20 AI chip sales correlates with ongoing rare earth element trade negotiations between the U.S. and China, according to Reuters. AMD is similarly seeking to resume sales of its MI308 AI chip in China.
Rare earth elements (REE), including lanthanum and cerium, predominantly mined in China, are critical components in technologies such as electric vehicle batteries. These materials have become pivotal in current Sino-American trade discussions.
However, not all stakeholders endorse this trade development.
Congresswoman Raja Krishnamoorthi expressed concerns in a statement, noting the move "would hand our most advanced technologies to foreign adversaries while contradicting this administration's previous export control positions," as reported by Reuters.
Lutnick remains unconcerned, telling CNBC on Tuesday that China would only receive NVIDIA's "fourth-tier" chips.
"We don't sell them the best, not even the second or third best," Lutnick emphasized during the interview.
This announcement follows rumors just one week earlier that NVIDIA planned to design and launch a new AI chip specifically for the Chinese market to resume operations without violating U.S. export regulations.
The U.S. continues to finalize its AI chip export policies. The Trump administration officially repealed Biden's AI dissemination rules in May without subsequent formal updates.
Recent Bloomberg reports suggest the Trump administration is considering additional restrictions on AI chip exports to countries like Thailand and Malaysia to prevent smuggling. Malaysia implemented export licenses for U.S.-manufactured AI chips on Monday. TechCrunch has reached out to NVIDIA for comment.
