Former Top Biden Adviser: Beijing Likely to Give In to Demand for Nvidia Chips
Chinese companies are likely to end up buying Nvidia chips despite reports that Beijing has ordered its top firms to cease those purchases, said Jake Sullivan, former national security adviser to President Joe Biden.
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Sullivan’s comments came months after the Trump administration reached a deal with Nvidia that was set to allow the semiconductor company to export its previously restricted advanced H20 chips to China (see 2509260019). Beijing later reportedly ordered its top companies to stop buying Nvidia chips.
Sullivan, speaking during a conference hosted by Harvard University last week, said his “theory” is that Beijing likely wants its technology companies to first prioritize purchases of Ascend chips from Huawei. Once they run out of Ascend chips, Beijing will “let them fill in with Nvidia after that,” Sullivan said. “That's what I think, because I don't think they'll deny themselves the compute capacity, if it's there.”
Sullivan also guessed that the Chinese directive may be a ploy to gain negotiating leverage in trade talks with the U.S. He said it could be a “negotiating gamesmanship” tactic in which Beijing will eventually offer to buy Nvidia H20 chips in exchange for a trade concession from the U.S.
“I think it might work,” Sullivan said, “which is crazy.” He stressed that he could be “totally wrong” and that he hasn’t spoken with Chinese officials about this issue since they ordered Chinese firms not to buy Nvidia chips.
Sullivan was also asked about “escalation dominance” in the U.S.-China trade relationship. The two sides have levied a string of new trade controls and actions against each other in recent months, marked most recently by China’s upcoming export restrictions on rare earths and the Trump administration’s threat to impose controls on exports of critical software (see 2510220043).
Sullivan said the “big challenge that I see here is about the relative pain thresholds of the two countries.” He said President Donald Trump has a “basic intolerance” for any move that might cause a “sharp market disruption,” while Beijing may have a “greater capacity” to "absorb" a market disruption.
“I think this creates huge escalation challenges for us if we get into these kinds of tools of economic statecraft,” Sullivan said.
That suggests that “if the U.S. is going to escalate, it can't be sort of a typical move up the ladder,” he said. “It has to be really, really sharp to try to put an end to it.” That could mean “big financial sanctions on major banks, or something else”
“You have to court a lot more risk because of the reality of the different pain thresholds, and that's a tough thing, because then you've got to hold on tight and really drop a huge hammer,” Sullivan said. “And that's hard for an American president” because of the “massive risks associated with it.”