Lawmaker Slams Commerce Secretary Over Nvidia Sales to China, Even as Nvidia Faces Hurdles in Resuming Supply

A Republican lawmaker is ramping up pressure on the U.S. Commerce Department over its decision to allow Nvidia to resume exports of its H20 artificial intelligence chips to China, warning that the move could severely undermine America’s technological edge and empower Beijing’s military and surveillance ambitions.

In a strongly worded letter sent Friday to Commerce Secretary Howard Lutnick, Rep. John Moolenaar, who chairs the House Select Committee on the Chinese Communist Party, criticized the reversal of an earlier export restriction and demanded urgent clarification on how the department intends to handle the renewed sales. The ban, initially imposed in April by the Trump administration, was aimed at cutting off China’s access to cutting-edge U.S.-designed AI chips out of national security concerns.

“The Commerce Department made the right call in banning the H20,” Moolenaar wrote, referring to Nvidia’s China-specific chip. “We can’t let the Chinese Communist Party use American chips to train AI models that will power its military, censor its people, and undercut American innovation.”

Moolenaar also warned that allowing the H20 chips into China could tilt the global AI race in Beijing’s favor.

“The H20 significantly outperforms anything Chinese chipmakers like Huawei can currently produce at scale,” he noted, calling it a “substantial increase to China’s AI development.”

His latest remarks are the strongest yet since Nvidia announced earlier this week that it had secured approval to resume H20 shipments to China under a revised licensing regime. Under the current policy, the Commerce Department still requires export licenses for H20 sales, but Nvidia said it has received assurance that licenses will be granted and is preparing to ship chips.

Nvidia designed the H20 in response to Biden-era restrictions that blocked exports of its most advanced GPUs to China. While the H20 was specifically engineered to comply with those rules, it remains potent in key AI tasks like inference — the process by which trained AI models generate real-time responses. Inference computing is now one of the most commercially valuable segments of the AI chip market, with applications spanning from cloud services to AI assistants.

Moolenaar’s letter underscores concern that these chips are already helping Chinese tech giants accelerate AI capabilities. He pointed to Chinese companies like Tencent and DeepSeek, which have reportedly used the H20 in developing massive AI systems and even supercomputers. A recent congressional report released in April 2025 by the Select Committee on China cited the H20’s critical role in enabling DeepSeek’s AI model that stunned the global tech community earlier this year.

The lawmaker’s criticism represents a rare public rebuke of a Trump administration policy by a fellow Republican, underlining how deep the alarm runs among Washington’s China hawks over Beijing’s rapid AI progress. Bipartisan consensus has emerged around restricting China’s access to American-designed chips, a key ingredient in building powerful machine learning models and national security tools.

The decision to ease restrictions has triggered broader market reactions as well. Nvidia shares dipped into negative territory on Friday shortly after Moolenaar issued his letter. A spokesperson for Nvidia defended the move, saying, “The government made the best decision for America, promoting U.S. technology leadership, economic growth and national security.”

The Commerce Department has not commented publicly, but Secretary Lutnick said Tuesday that the move to resume H20 exports is tied to wider negotiations with China involving rare earth materials and strategic commodities like magnets — essential components in both defense and tech industries.

But lawmakers like Moolenaar remain unconvinced. In his letter, he requested a detailed briefing no later than August 8 on how the Commerce Department plans to assess license applications for the H20 and similar chips. He also demanded transparency on the number of chips expected to be exported and the recipients.

The controversy has reignited debate over the delicate balance between preserving America’s technological dominance and engaging in strategic trade, particularly with a geopolitical rival that is actively working to close the AI gap.

Nvidia Faces Hurdles in Resuming China AI Chip Supply Following U.S. Approval

Meanwhile, Nvidia has informed customers in China that it has limited supplies of its H20 artificial intelligence chips, the most advanced model it is allowed to export to the country under current U.S. restrictions.

The disclosure, reported by The Information, adds to growing uncertainty surrounding Nvidia’s business in China, even as the company attempts to navigate intensifying geopolitical and regulatory headwinds.

The H20 was part of a trio of custom AI chips—alongside the L20 and L2—developed by Nvidia to comply with Washington’s sweeping export controls, which aimed to curtail China’s access to advanced U.S. semiconductors for military and surveillance use. While the L20 and L2 made it to market, the H20 faced delays and eventually a halt in shipments following an April directive from the U.S. Commerce Department requiring licenses for sales of all three chips to China.

According to The Information, Nvidia was forced to cancel customer orders and manufacturing slots at Taiwan Semiconductor Manufacturing Company (TSMC) as a result of the April policy change. TSMC, which had previously allocated capacity for H20 production, repurposed its lines for other clients, and restarting H20 production would take up to nine months, Nvidia CEO Jensen Huang reportedly told attendees at a media briefing in Beijing this past week.

Despite this disruption, Huang said Nvidia expects licenses for the H20 to be granted swiftly. He also assured that shipments would resume in China, although the recent internal communication cited by The Information suggests supply will be significantly constrained in the near term.

Meanwhile, Nvidia has announced plans to introduce a new graphics chip specifically for the Chinese market called the RTX Pro GPU. This product, the company says, is engineered to fall below the performance thresholds that would trigger U.S. export bans, making it compliant with current restrictions.

The shortage of H20 chips adds to Nvidia’s complex position in China, a market that accounted for about 17% of its data center revenue before the October 2023 export ban. Since then, Nvidia has been trying to shore up its presence with modified hardware, while also adapting to shifting policies from Washington.

The timing of the resumed shipments followed a private meeting between Jensen Huang and President Donald Trump earlier this year, where tech export restrictions and Nvidia’s China interests were reportedly discussed. After that meeting, Huang embarked on a closely watched trip to China, where he met with top executives and publicly expressed optimism that licenses for H20 exports would be processed swiftly.

In Beijing, Huang confirmed that the company was working to increase the supply of the H20 chip in China, and at the same time announced the RTX Pro GPU. The RTX Pro is a graphics chip designed for less advanced AI tasks, making it exempt from the latest round of restrictions.

Analysts say the company’s balancing act—maintaining U.S. compliance while preserving market share in China—will continue to test Nvidia’s strategic flexibility. With high-end chip demand surging due to the AI boom, competitors including Huawei have also ramped up their efforts, seizing the opportunity created by Nvidia’s regulatory constraints.

Nvidia is expected to provide updates on its China strategy during its next earnings report, scheduled for August 21.