The complete saga of U.S./China semiconductor export controls ping pong from A to Z
i.e. how not to conduct international industrial policy
Hi how y’all doing! Following my earlier stories on the U.S. and chips exports, there is new development to report. Following these stories takes a good amount of research, so I hope you appreciate the effort. If you are unfamiliar with export controls, restrictions that governments place on selling and buying technologies they consider to be relevant for their national security, you can read my deep dive on the Quantum Strategy Institute’s repository.
December 2024
Our story starts when Joe Biden closed some loopholes in the U.S. export control framework in December 2024. This export control framework had been in place since October 2022.
According to CSIS, the purpose of closing the loopholes was to (1) choke off China’s access to the future of AI and high performance computing by restricting China’s access to advanced AI chips; (2) prevent China from obtaining or domestically producing alternatives; and (3) mitigate the revenue impacts on U.S. industry by continuing to allow Chinese sales for less advanced, less threatening, technologies.
This last category included Nvidia’s H20 chip, a less advanced semiconductor that Nvidia specifically designed in 2022 to match Biden’s earlier export control regulations, and had been allowed to sell to China.
Although designed against China, the Biden rule sorted more than 100 other countries in different tiers of export restrictions, including selected countries within the EU, and Middle Eastern countries. American chip manufacturers including Nvidia and AMD were not happy with this because it restricted their sales.
January - April 2025
Then came January 2025 and two things happened. Donald Trump became the president of the United States, and Chinese Deepseek announced that it was able to develop an AI model at a fraction of the cost relative to estimates of major players in the industry. DeepSeek claimed it could operate as effectively as ChatGPT using less advanced chips.
All of a sudden, there is increasing demand for Nvidia’s H20 chips among Chinese technology companies such as Tencent, Alibaba, and ByteDance, the parent company of TikTok. Nvidia CEO Jensen Huang understands this could be a problem, and starts courting the White House and dining in Mar a Lago. Unfortunately this does not help, as on April 15, 2025 the administration stops the free sales of H20 to China, by introducing a mandatory license.
May 2025
Then, on May 14, 2025 the Trump administration suddenly cancels the Biden mandate from 2024, including restrictions to sell chips to the EU and to Middle East. Now it would be ok to sell the chips overseas again. The reason for this, as stated by the Commerce Department, was that the requirements would have “stifled American innovation and saddled companies with burdensome new regulatory requirements”.
The announcement also coincided with President Trump’s visit to Saudi Arabia, where the U.S. agreed to sell $142 billion worth of jets, missile defense and other weapons systems to Saudi Arabia, and said that “chip giant Nvidia will build some of the world’s most advanced chips in Saudi Arabia. It’s designed to tie the kingdom to American technology and exclude Chinese technology.”
Needless to say, Saudi Arabia and Europe were very happy to be able to buy American chips again.
August 2025
Then, on August 11, 2025 under new, unusual agreement, the administration agreed a revenue share deal with Nvidia and AMD for the U.S. government to get a 15% cut of Nvidia and AMD chip sales to China. The president had wanted 20% but Jensen Huang negotiated it down to 15%. Huang was happy to ship H20 again because “we haven’t shipped H20 to China for months”.
Having the U.S. government strike a revenue share deal with a private company was completely unheard of. Both Republican and Democratic law makers, and multiple scholars and institutes raised concerns for the actual outcome, and for precedent.
If revenue share was controversial, there was more to follow. On August 22, 2025 the government took a roughly 10% stake in the chipmaker Intel, becoming its biggest single shareholder. This equity was taken in exchange for the grants awarded to Intel via the Biden ear CHIPS and Science Act. The news pushed Intel’s stock price to a 50% gain. If the revenue share deal had raised eyebrows, the government forcing itself as the main shareholder of a private tech company was from another planet altogether.
September 2025
Just weeks later, on September 18, 2025, Nvidia announces it will take a 4% stake in Intel by investing $5 billion. Nvidia would become one of the largest shareholders of Intel, now together with the U.S. government. Intel’s stock price increased 23%.
September was a busy month for Nvidia, as they also announced to invest up to $100bn in OpenAI, the firm behind ChatGPT.
October 2025
On October 6, 2025, AMD and OpenAI announce they signed a multibillion-dollar chip deal that would also give the ChatGPT creator the option to buy a large stake in the chipmaker for .
“The deal offers OpenAI an opportunity to buy 10% in AMD and marks a major vote of confidence in the company’s AI chips and software. Shares of AMD surged more than 30% and added about $80bn to its market capitalization after the announcement.”
If it’s hard to keep up, don’t worry you are not alone. This looks like an AI bubble of the worst kind. If you are interested in following the AI bubble news in particular, I recommend following Ed Zitron’s podcast Better Offline.
This is the part of the story where we introduce the energy concerns. Just this one agreement alone, the agreement between AMD and OpenAI, covers the deployment of hundreds of thousands of AMD’s AI chips, or graphics processing units, equivalent to six gigawatts, over several years beginning in the second half of 2026. This is roughly equivalent to the energy needs of 5m US households, or the electricity produced yearly by the Hoover Dam three times over.
December 2025
Welcome to December. On Monday the 8th, President Trump wrote on his Truth Social that he has informed President Xi of China that Nvidia can now sell its H200, the more advance chip to China and other countries. AMD and Intel would also be allowed to sell their advanced technologies.
But there’s a catch. China will need to pay a 25% fee to the U.S. government.
As said by Rush Doshi, the Director of the Initiative on China Strategy at the Council on Foreign Relations and an Assistant Professor at Georgetown University:
“This is a big deal. Essentially a reversal of the US export control policy on advanced chips. Possibly decisive in the AI race. Compute is our main advantage — China has more power, engineers, and the entire edge layer — so by giving this up we increase the odds the world runs on Chinese AI.”
But December is not over, there’s more.
On December 18th, Truth Social, President Trump’s social media company Trump Media & Technology announced its merger with TAE Technologies, a fusion energy company, in an all-stock deal that the companies said Thursday is valued at more than $6 billion.
The combined company says it plans to find a site and begin construction next year on the “world’s first utility-scale fusion power plant,” with aims to provide the electricity needed for Artificial Intelligence.
What a year!
What is this story about and does it matter?
This story is about insider trading and corruption, greed, the AI bubble, environmental sustainability, and rapidly shifting geopolitical polars. But most importantly, the story tells us that we’re now living in an era where anything goes.
The beacon of democracy is no longer considered a democracy, the cradle of capitalism is starting to introduce socialist ownership strategies, and any learnings of Enron, the dotcom bubble, or the great recession appears to have been forgotten.
But these developments need not to continue like this. Voters and consumers are taking notice and pushing back. The economy belongs to all of us, workers, families, young people and children. We don’t need to accept wrongdoings as given. I’m doing my share by writing these letters. Let’s all inject our own small contribution to the society when and where we see wrongdoing.
About Deep Policy
Stay relevant and connect the dots.
Hi, I’m Petra Söderling. Welcome to Deep Policy, a space where I help you understand how governments, technology, and innovation policy shape the world around us.
This newsletter and blog continue the conversation I began in my book Government and Innovation – the Economic Developer’s Guide to Our Future, and on my podcast Deep Pockets with Petra Soderling. If you’ve ever wondered why governments pour billions into quantum, AI, or biotech, or how geopolitics bends the path of technology, you’re in the right place.
Every week, I share a mix of deep-dive essays, timely analysis, and cultural reflections, always with an eye toward what matters for you: the choices being made now that will shape your future economy, your industry, and your society.
Additional Resources
For more analysis, insight, maybe some entertainment, please feel free to explore these:
Petra Soderling & Co advisory services
Consulting governments, NGOs and companies on the economic and financial impact of deeptech. It’s not just me, it’s a whole team! Selected testimonials for my work from private clients can be found here. A banner with most notable public clients can be found here.
Deep Pockets Podcast
Every second week, more or less diligently, I bring forward a guest to discuss all things in the intersection of government and innovation.
The Book: Government and Innovation - the Economic Developer’s Guide to our Future
My 2022 Amazon Hot New Release (editorial pick) is divided in three sections; the Tools that governments have to create new innovative industries, Examples from five countries who’ve done it right, and a How To section for implementation. Available in paperback or hard cover.
The audiobook: Government and Innovation - the Economic Developer’s Guide to our Future
My 2022 Amazon Hot New Release (editorial pick) is divided in three sections; the Tools that governments have to create new innovative industries, Examples from five countries who’ve done it right, and a How To section for implementation. Available in paperback or hard cover.
Quantum Strategy Institute
In my role as the Head of Government and Consortium Relations at QSI, I’ve written many papers on how public quantum strategies support economic growth. Explore the full website or find my articles directly here.