• The Trump administration has reversed Biden-era restrictions, approving case-by-case exports of advanced AI chips like NVIDIA (NVDA)'s H200 to China as of January 14, 2026, with 25% tariffs and security checks.
  • Bipartisan lawmakers urged a blanket ban on sales of advanced semiconductor manufacturing equipment (SME) to all of China on February 11, targeting tools like EUV/DUV lithography that China cannot produce domestically.
  • The policy flip reflects mutual dependencies, with China leveraging its dominance in critical minerals like gallium and rare earths, pressuring US production since 2023-2024 bans.

In a significant pivot, US policy on semiconductor exports to China has shifted from a "presumption of denial" to a more transactional approach, according to people familiar with the matter. Recent actions under the Trump administration have eased restrictions on advanced AI chips, with approvals announced for NVIDIA's H200 and AMD (AMD)'s MI325X chips to China, accompanied by 25% tariffs and mandatory security checks. This reversal, effective since January 14, 2026, aims to counter China's stranglehold on critical minerals, which account for 70% of global silver refining and key rare earths, creating a complex web of bilateral dependencies.

Efforts to restructure export controls have hit a snag, however, as bipartisan lawmakers push for tighter restrictions. In a letter to Commerce Secretary Lutnick and State Secretary Rubio dated February 11, legislators demanded a countrywide ban on advanced SME sales, alignment with allies, and potential US component curbs if necessary. They called for a strategy briefing within a month, targeting "chokepoint" tools such as EUV/DUV lithography that China lacks domestic production capabilities for. Without such measures, critics argue, the US risks eroding its AI leadership and enabling Chinese military advancements in areas like drones and cyber operations.

Chinese cloud and AI giants, including Alibaba (BABA), Tencent (TCEHY), and ByteDance, are poised to benefit from the eased access, with preparations for $14 billion in H200 orders underway. ByteDance, in particular, is prioritizing these chips for its 2026 AI labs, according to sources close to the companies. Meanwhile, China is clustering lower-end chips into "supernodes" via firms like Baidu (BIDU) to bypass sanctions, with plans for 256-chip systems by mid-2026, posing risks to US and allied supply chains. This move underscores China's broader push for semiconductor self-reliance, even as it balances tech gains against strategic risks of dependence on US imports.

The policy shift stems from a Trump-Xi truce in October 2025 that paused mutual restrictions, echoing earlier escalations in December 2024. Historical context shows a evolution from Biden's 2022 bans to Trump's 2026 reversal, driven by China's mineral leverage. In related developments, the US has shelved bans on China Telecom's US operations and Chinese EVs/buses ahead of summits, tied to rare-earth negotiations. ASML (ASML) has opened a Beijing site despite sanctions, while Congress eyes measures to boot China from US remote GPUs and prioritize Chinese buyers last in GPU queues.

Short-term outlook remains uncertain, with the "AI Overwatch Act" passed by the House on January 22 allowing congressional license revocations, though Senate resistance is expected. China may reject H200 imports to avoid over-reliance, maintaining its mineral bans. Long-term, experts warn that lifting controls could accelerate China's AI capabilities, with H200s offering six times more power than local chips, potentially disrupting US and allied production if mineral supplies tighten. The global semiconductor industry is shifting toward allied coordination with countries like the Netherlands, Japan, and South Korea on tool exports, highlighting a move away from unilateral US dominance toward more transactional ties.

Correction: An earlier version misstated the date of the bipartisan letter; it was issued on February 11, 2026, not February 10.