The Nvidia H20 decision reveals three emerging dynamics in Washington’s evolving statecraft
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Mr Jensen Huang, the CEO of Nvidia, has become a very important person in the fraught dealings between Beijing and Washington. As the two superpowers grapple with tariff negotiations and overlapping dimensions of geopolitical rivalry, Mr Huang has become an unofficial go-between. Nvidia, which recently became the first company in history to surpass US$4 trillion (S$5.2 trillion) in market capitalisation, commands more than an 80 per cent share of the global market in so-called AI-chips. These chips are vital to the advancement of artificial intelligence. More broadly, Nvidia’s cutting-edge chips are an essential enabler of modern day technologies – from self-driving cars to cloud computing and scientific research. Unsurprisingly, they are sought by state and non-state actors alike, with a ferocity unmatched in the history of commercial trade. For China, continued access to Nvidia’s supply chains remains a national priority. With this as background, Mr Huang has been jetting between America and China, straddling roles as Nvidia CEO and informal high-level intermediary to both governments. Somewhere in the blur of pursuing Nvidia’s commercial interests and serving as a sounding board to both sides, he helped persuade the Trump administration to lift restrictions on the export of Nvidia’s H20 chips to China.
Mr Huang’s persuasive powers over the US President were likely aided by China’s clamping down on exports of rare earths and other critical minerals – the essential materials for chipmaking and most other high-tech industries – to the US and its allies. China holds a virtual monopoly on such materials. Access to Nvidia’s chips will speed up China’s national efforts in artificial intelligence, smart robotics and quantum, and boost Beijing’s herculean efforts to create an indigenous semiconductor industry, among a host of other strategic tech priorities. This has raised alarm within the US defence establishment and among China hawks, who see the decision as a strategic capitulation. When pressed to justify the H20 export decision, US Secretary of Commerce Howard Lutnick explained that the goal is to provide China with a sufficient amount of American technology, so that China’s developers become “reliant on US technological infrastructure”. In his view, an “addiction” to US tech will compel China to abandon its efforts at self-sufficiency in semiconductor design and fabrication, particularly as the AI revolution – and innovation cycle – speeds up and China’s insatiable appetite for chips continues to grow. Mr Lutnick’s remarks elicited incredulity. They suggest there may have been backroom lobbying or commercial pressure, possibly involving Mr Huang, that influenced one of the most striking reversals in US export control policy in nearly a decade.
THE REALPOLITIK OF MEGA TECH
The Nvidia H20 decision reveals three emerging dynamics in Washington’s evolving statecraft.
First, the White House is actively integrating US mega tech companies into its national security and foreign policy apparatus. This is driven by a broader effort to expand “made-by-America”’ technology stacks and ecosystems globally – and to control access to critical technologies by Chinese entities.
Second, the emergence of a small circle of mega tech bosses with direct access to the White House has spawned an opaque, ad-hoc, deal-making environment, which potentially sidelines traditional policymaking channels, increasing the risk of arbitrary and confusingly contradictory actions. The result: more fragmentation of global value chains as businesses look to hedge against US policy whiplash.
Third, China appears to have adapted to this new feedback loop between US mega tech and Washington. Beijing’s realpolitik now involves exploiting divisions and incentives within the US system – using corporate interests and lobbying to push for favourable outcomes in service of its techno-nationalist agenda. The end result? A continued bifurcation of the global tech landscape, shaped increasingly by strategic competition between the US and China.
THE RISE OF MADE-BY-AMERICA TECH STACKS
The US government now relies heavily on Nvidia, Microsoft, Amazon, StarLink, SpaceX and a host of other non-traditional defence firms to build leading-edge technology and infrastructure for national security purposes. Microsoft and Amazon, for example, build and maintain exclusive, ring-fenced cloud and database infrastructure for the US National Security Agency, the Central Intelligence Agency and defence-related agencies. SpaceX builds rockets and systems used to launch US defence and intelligence assets, and Starlink sells global subscriptions for broadband internet access via its low-earth orbit satellite constellations – while simultaneously hosting missile-tracking and surveillance technology for the US government. Meta and Google fund key innovation and construction around undersea fibre optic cables. These networks move vast amounts of internet and cloud traffic around the world, even as Washington attempts to decouple these cable systems from Chinese interests.
Nvidia, on its part, is rapidly evolving from a chipmaker into a full-stack AI and cloud services company. It is building upon its first-mover advantage in AI chips to offer a complete suite of interconnected services including cloud computing, cybersecurity and database infrastructure, all under one safe roof. The US government has openly encouraged Nvidia’s partnership with the likes of Microsoft Azure, Google Cloud, Oracle Cloud and other American firms to further this endeavour. Thus, Washington is moving beyond blocking critical US technologies to targeted entities, as it has famously done with Huawei and other Chinese tech titans. Its strategy is now shifting towards building and prodding the adoption of “Made-by-America” tech ecosystems. These systems are pitched to countries as safe and trustworthy alternatives to Chinese platforms. The Trump administration is expected to push these mega tech ecosystems through a combination of coercion and encouragement, via ongoing deals and tech diplomacy with trading partners. Meanwhile, Chinese tech companies such as ByteDance, Alibaba Cloud and Tencent Cloud will face headwinds, even as they move their regional headquarters and data centres to neutral places like Singapore and Malaysia. For South-east Asian countries and business leaders, this means they must elevate their game of tech diplomacy and, beyond government-to-government relations, engage mega tech firms directly. As tech stacks continue to bifurcate, policymakers and business leaders in the region must learn to navigate both Team Trump and Team Tech.
THE NEW POWERBROKERS
Mr Trump’s penchant for seeking out personal relationships with billionaire CEOs and powerbrokers has proven to be a win for Mr Huang of Nvidia. The premium that is now placed on access to the White House and Mr Trump’s inner circle has transformed American politics. But this will lead to a more chaotic and unpredictable environment, as individuals enter and leave Mr Trump’s orbit. Consider Mr Elon Musk’s brief relationship with Mr Trump, as his Doge henchman, and how badly it ended. Mr Huang is a far more gifted diplomat and operator than Mr Musk, and Nvidia may ultimately prove much more valuable to the US government than Mr Musk’s companies (SpaceX, StarLink and Tesla) but there are other concerns. Nvidia is a for-profit enterprise, not a US government agency. In the case of the H20 chip, what’s good for Nvidia and China could be bad for the US – from a geopolitical and national security perspective. To be sure, this is all a grey area. But these developments are troubling, as they suggest a breakdown of bureaucratic due diligence and democratic oversight in favour of elite corporate access. The H20 decision, if it stands, is a major coup for China’s techno nationalists. Industry insiders claim that Nvidia’s H20, despite being labelled as lagging “third and fourth” generation technology, outperforms indigenous Chinese chips in terms of memory bandwidth. Some analysts even suggest that the H20 surpasses Nvidia’s more restricted H100 chip in inference tasks, which are key for advanced robotics, autonomous weapons and surveillance systems. These are early days in the Trump administration’s dealings with mega tech bosses. The rest of the world is only just beginning to see just how consequential this trend may turn out to be.
Alex Capri is a senior lecturer at the NUS Business School. He is also author of Techno-Nationalism: How It’s Reshaping Trade, Geopolitics And Society. He is a former partner and regional leader at KPMG’s Asia Trade and Customs Practice.