President Donald Trump’s decision to approve previously banned exports of Nvidia’s powerful H200 artificial intelligence chips to China could turbocharge the People’s Liberation Army’s technological ambitions, narrowing America’s edge in military supremacy. Over time, this risks shifting the balance of power in the Indo-Pacific, the primary region in which Washington competes with Beijing for influence and power.
Chinese military documents emphasise that future warfare will hinge on using artificial intelligence to determine the precision and lethality of conflict.Credit: AP
It’s still unclear how far the deal will go. Chinese regulators are reportedly keen to limit access to the chips to keep domestic developers on the path toward to self-sufficiency in semiconductor production. Trump says that President Xi Jinping has responded favourably to the move. The plan would be for shipments to go to as-yet unspecified “approved customers”.
But the shift away from tighter controls, if China approves this deal, could give the country crucial access to Nvidia’s second-most powerful AI processor, which is roughly six times more capable than the H20 chips previously available to it. It’s an important tool for any country trying to push the frontier of AI, especially in military applications.
The stakes are clear for the PLA. Chinese military documents emphasise that future warfare will hinge on using artificial intelligence to determine the precision and lethality of conflict. Beijing believes that winning future wars will depend not only on the largest fleets or longest-range missiles, but also on the ability to sense, decide, and strike faster than the enemy. This requires enormous computing capacity.
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The country’s domestic semiconductor sector has made undeniable progress, but remains far behind the cutting edge. The PLA and its affiliated research institutes have repeatedly sought access to American chips through commercial procurement channels. A review of records by researchers at Georgetown University’s Centre for Security and Emerging Technology (CSET) shows the Chinese military purchasing Nvidia GPUs to develop AI-enabled systems.
There is also a growing body of cases of restricted American chips being diverted illegally. Earlier this month, two Chinese nationals were detained for allegedly violating export control laws by attempting to smuggle at least $US160 million ($242 million) worth of Nvidia chips to China, the US Department of Justice said. A third, the owner of a Houston company, has already pleaded guilty. Prosecutors allege the network obscured the chips’ origin by stripping Nvidia labels and rebranding them under a fabricated name, including advanced H200 models.
Cole McFaul, senior research analyst at CSET, told me that under China’s civil-military fusion strategy, which blurs the lines between civilian tech and defence, the PLA aims to integrate commercially available AI hardware into military systems, although there are likely obstacles to implementation. “It’s early days,” McFaul said, “but if the Chinese military is willing to work through the potential cybersecurity risks, we could see a world where the PLA is able to deploy highly capable AI systems for military-use cases. That would be very worrying for American power.”
Policy experts are sounding similar warnings. Allowing China access to chips like the H200 risks accelerating Beijing’s military AI capabilities at a pivotal moment, notes the Atlantic Council. Whatever the PLA can do today with constrained hardware, it could do far more – and far faster – with next-generation US technology. The Council on Foreign Relations, in an expert brief, warns that exporting such chips could meaningfully erode the US lead in AI. Computing power is now the key input in developing and deploying the most advanced systems.
