Security experts publicly warn against selling NVIDIA AI chips to China due to national security concerns.

Twenty national security experts and former government officials, including seven from agencies such as the National Security Agency, Homeland Security, and the Defense Department, have urged Commerce Secretary Howard Lutnick to reverse the Trump administration's decision to allow Nvidia to resume selling H20 AI chips to China. In a letter sent Monday, they characterized the decision announced two weeks earlier as a "strategic misstep that endangers the United States' economic and military edge in artificial intelligence (AI) -- an area increasingly seen as divisive in the 21st-century global leadership."

The experts emphasize that the H20 is far from an outdated chip, contrary to any implicit suggestion otherwise. "The H20 is a potent accelerator of China's frontier AI capabilities," the letter states. "Designed specifically to work around export control thresholds, the H20 is optimized for inference, the process responsible for the dramatic capabilities gains made by the latest generation of frontier AI reasoning models. For inference tasks, the H20 outperforms even the H100, an AI chip this administration has restricted access to due to its advanced capabilities." Chinese laboratories have begun bulk ordering these chips to develop more advanced AI models, raising concerns about the trajectory of Chinese AI development.

The signatories warn of multiple strategic consequences. They project that U.S. data center demand alone will require 90 percent of global chip supply through 2030, and allowing Chinese purchases will exacerbate supply bottlenecks domestically. More critically, they assert that "we fully expect the H20 and the AI models it supports to be deployed by China's People's Liberation Army." Beyond immediate military concerns, the experts caution that the policy reversal "is likely to generally weaken export controls as an effective foreign policy tool for the United States. This policy reversal is likely to create confusion among both allies and competitors, and may even be interpreted as a weakening of U.S. resolve on other key issues in which trade and national security may be in tension with one another."

The administration has justified the decision as part of broader trade discussions with China regarding rare earth elements. Commerce Secretary Lutnick stated on CNBC on July 15 that "We want to keep having the Chinese use the American technology stack because they still rely upon it." The reversal came after Nvidia founder and CEO Jensen Huang met with Trump and other legislators earlier in July, and subsequently traveled to Beijing to meet with industry and government officials. In April, the SEC had required Nvidia to obtain a license to sell H20 chips to China, freezing sales of chips designed specifically to circumvent earlier export controls on Beijing.

The signatory experts counter that the original decision to ban H20 exports was sound policy. "The decision to ban H20 exports earlier this year was the right one," the letter reads. "We ask you to stand by that principle and continue blocking the sale of advanced AI chips to China as America works to maintain its technological edge. This is not a question of trade. It is a question of national security." Meanwhile, Nvidia, with a market capitalization of $4.2 trillion making it the world's most valuable company, saw its stock price rise 1.87 percent Monday to a record-high $176.75 on Nasdaq. The company, which began trading in 1999, has emphasized its commitment to domestic job creation including manufacturing.