US – DC’s divided on selling chips to China
July 31 (Reuters) – (This was originally published in the Artificial Intelligencer newsletter, which is issued every Wednesday. Sign up here to learn about the latest breakthroughs in AI and tech.)
Both of this year’s mega M&A deals have landed squarely in one corner of tech: cybersecurity, with AI on the minds of both buyers.
identity security leader CyberArk – the company’s largest deal to date – as it races to deliver a comprehensive suite of cybersecurity products amid surging AI-driven demand.
Palo Alto CEO Nikesh Arora attributed the mega deal to the rise of AI and the explosion of machine identities, which he said made it clear that the future of security must be built on the vision that “every identity requires the right level of privilege controls.”
It’s the second-largest deal ever for an Israeli tech company, coming just months after Google’s $32 billion purchase of cloud security firm Wiz.
Wiz CTO Ami Luttwak, told me,
AI threats have become the defining theme in security,
From deepfake impersonations to automated phishing to rapid-fire websites created by vibe coding, companies are finding themselves needing to deal with an ever-growing volume of AI-derived software being launched at unprecedented speed – and that means security tools need to evolve just as fast. This is fueling a shift from manual, service-based approaches to real-time detection and automated protection.
As enterprises look to streamline vendors after numerous breaches have exposed the limits of patchwork security, don’t be surprised if more consolidation is on the way.
In this week’s newsletter, we’ll dive into the divided perspectives coming out of Washington on how America exports its AI technology, take a closer look at new data on where ChatGPT gets its knowledge, and explore the latest AI model architecture that’s creating a buzz among researchers.
DC’s China chip divide
American lawmakers can’t seem to agree on how best to use the nation’s powerful AI technology to shape the world order. The debate in Washington – marked by two sharply different visions for U.S. AI regulation and export controls – has Nvidia’s valuable chips at the center, as America navigates its most important bilateral relationship of the century: with China.
For now, the camp that favors a more open approach appears to have the upper hand. In a dramatic policy reversal, the Trump administration lifted a previous ban and allowed Nvidia to resume sales of its H20 GPUs to China. The logic, as White House national economic adviser Kevin Hassett put it, is to maintain America’s technological edge: if China’s not buying chips from the U.S., then they’re innovating and making their own.
That’s the view Nvidia CEO Jensen Huang has been advocating as well. His company – the most valuable in the world – still earns a mid-single-digit percentage of its revenue from China (though that number used to be much higher). His vision, which positions U.S.-made chips, software, and cloud infrastructure as the backbone of global AI development, has won key allies, including investor-turned-White House AI and crypto czar David Sacks. This coalition ultimately helped push for the policy reversal on chip sale bans.
This moment reminds me of covering tech in China during the 2010s, when American companies still had a foothold in the country’s massive market and tech leaders regularly lobbied Washington to keep those doors open. Today, with the exception of Apple, most U.S. tech CEOs have all but disappeared from China’s local market and rarely advocate for access to it.
The impact on Nvidia is already visible. Our exclusive reporting reveals that Nvidia placed an order for 300,000 H20 chipsets with Taiwan’s TSMC just last week – a move driven by unexpectedly strong demand from China. It was enough for Nvidia to realize that relying on its existing inventory wouldn’t be enough.
Still, some lawmakers from both sides of the aisle and former national security officials are pushing back hard against the administration’s move to ease chip restrictions. In a letter this week, they argued the decision would likely weaken the effectiveness of export controls and encourage Beijing to seek more concessions from Washington. There are also concerns that the move could give Beijing a critical advantage, especially in military AI and surveillance.
Either way, China isn’t waiting around. Chinese AI companies have formed new industry alliances to foster a self-sustaining tech ecosystem. Huawei has just rolled out its new AI computing system in Shanghai, which some say could rival Nvidia’s most advanced chips – a clear sign that China is investing heavily in self-reliance and innovation to bridge any gaps left by U.S. policy.
READ the latest news shaping the Nvidia market at Newsvidia
US – DC’s divided on selling chips to China, source
