Washington / Beijing | December 18, 2025
The US–China tech war, long centered on semiconductors, artificial intelligence chips, rare earths, and quantum technologies, showed signs of easing in late 2025 as Washington and Beijing moved toward a fragile détente following months of escalation.
In a major shift, the Trump administration approved Nvidia’s export of its H200 AI chips to China on December 8, marking the most significant relaxation of technology restrictions since the Biden era. The H200 is Nvidia’s second-most powerful AI processor, just below the restricted Blackwell series, and will be allowed for vetted commercial use following US security reviews.
Under the new framework, the chips will be routed via Taiwan, with the US collecting a 25% import tax, generating revenue while retaining oversight.
Why the US Approved Nvidia’s H200 Sales
Officials say the move serves multiple strategic goals:
Preserving US market share in China’s massive AI ecosystem
Slowing China’s push for full semiconductor self-reliance
Preventing Huawei from dominating the domestic AI chip market
Securing tariff revenue amid broader trade negotiations
Nvidia CEO Jensen Huang has repeatedly warned that cutting off China entirely would accelerate the rise of domestic rivals and permanently lock US firms out of the world’s largest AI market.
Political Backlash in Washington
The decision has drawn sharp criticism from lawmakers and security analysts. Members of Congress argue that even downgraded AI chips could strengthen China’s military and surveillance capabilities.
Bipartisan momentum is building behind the proposed SAFE CHIPS Act, which seeks to block further easing of export controls and tighten oversight on AI and quantum technologies.
How Tensions Peaked Earlier in 2025
The approval comes after a year of intense escalation:
The US expanded its Entity List, adding 42 Chinese firms in March and 23 more in September
Licenses were made mandatory for Nvidia’s earlier H20 AI chips
China retaliated by tightening rare earth export controls, expanding them on October 9 to cover five additional elements, related technologies, and extraterritorial enforcement rules effective December 1
The rare earth squeeze disrupted global supply chains and increased pressure on US allies and manufacturers.
Trade Truce Brings Temporary Relief
Following Trump–Xi Jinping talks in late October, both sides agreed to a one-year pause on the most damaging measures:
China suspended expanded rare earth export restrictions
The US trimmed select tariffs and approved limited AI chip access
Commercial flows resumed under close monitoring
The truce remains valid through November 2026, though officials on both sides describe it as provisional.
Huawei’s Resilience Despite Sanctions
Despite being on the US Entity List since 2019, Huawei continues to advance its domestic ecosystem:
Development of HarmonyOS and Ascend AI chips
Estimated 200,000 to 800,000 AI chip units produced in 2025
Manufacturing constrained by 7nm limits at SMIC
Chinese AI models now compete closely with US systems despite weaker hardware, fueled by heavy state investment and algorithmic optimization.
What Comes Next
The tech war has shifted from outright denial to negotiated access, but risks remain:
China aims for 70% semiconductor self-sufficiency by 2028
The US is rallying allies through rare earth and tech cooperation pacts
Congress is pushing new AI, quantum, and national security legislation
Analysts warn that while 2025 ended with de-escalation, 2026 could see renewed confrontation if political pressure or security incidents derail the fragile truce.
