Panelists Question Strategy of Selling Advanced US Chips to China

Paul Lekas, a senior executive with the Software & Information Industry Association, and Jimmy Goodrich, a consultant with the Rand research institute, agreed that selling the most high-end U.S. chips to Beijing could allow China to more quickly surpass American companies in the AI race.

“It's my view that we absolutely should not be selling the most advanced” AI chips to China, Goodrich said during a Hudson Institute event this week. He added that even the U.S.’s “fourth-best chip” is more powerful than China’s equivalent chip “by a wide margin,” and those types of chips are important for China as it tries to gather as much advanced computing power as possible.

“If you want to deploy models, you still need state-of-the-art semiconductors and data centers to deploy and inference your chips,” Goodrich said. “And we all know that the export controls and the complexity of the technology has held China back, not maybe as far as some would like, but it has created a lot of hiccups and speed bumps for China.”

Although U.S. exporters are focused on maximizing their profits by selling “to as many markets and as many people as possible,” Goodrich said they may want to rethink that strategy when it comes to advanced chip exports to China. He used the example of a car racing team selling its racing secrets to its competitors for the sake of earning more money.

“It’s like Ferrari saying, 'Just because we make an extra 50 cents, we're going to sell our engineers, our design specialists, our fuel, our drivers to all of our competitors, because it's going to increase our top line,'” Goodrich said. “But then you lose at the end of the day, because you've enabled all of your competitors to have the best technology, just like you do.”

The Trump administration earlier this year announced it would be allowing Nvidia to sell its advanced H20 chip to China, but the U.S. has so far stopped short of permitting exports of Nvidia’s most advanced Blackwell chip (see 2511030031).

Lekas, whose association represents major technology companies such as Amazon and Google, said there’s a “clear division” among the top AI firms on this issue. He said more of his members would prefer the U.S. to focus on spreading the American AI technology stack around the world.

“By allowing companies to sell the most advanced chips to China, what are we actually going to achieve?” he said. “We will enable China to develop its AI much more quickly than it would otherwise.”

He said the U.S. can “best advance American interests, values, national security [and] economic security by trying to diffuse the rest of the stack,” adding that the U.S. should focus on pushing other countries to build their AI systems on U.S. software and models.

The Commerce Department is working on a new program aimed at increasing U.S. exports of AI technologies and services to trading partners (see 2510220008).

Lekas also said the U.S. needs to be “much more focused” on how it maintains its technological lead over China in advanced semiconductor manufacturing equipment. That should include working with other countries that house the world’s leading equipment makers, he said, like the Japanese and Dutch.

“We need to be working much more hand-in-glove with Japan and the Netherlands on that to make sure that we're not allowing that equipment to leak to China,” Lekas said. “China will be able to catch up on data. They'll be able to catch up on models. They certainly have the energy lead. But this is really where we can try to mitigate some of the potential national security risk.”

In addition, Lekas and Goodrich argued that the U.S. needs a clearer definition of what's captured under the umbrella of national security. “It almost seems like national security swallows everything else, and that's clearly not the case,” Lekas said. “Not everything is national security.”

Goodrich stressed the importance of think tanks and other industry officials giving their input to the government to help it determine what types of technologies matter most to U.S. national security, especially because the government may not have many advanced technology experts. He recalled a story told by a Cabinet official in a previous administration, who said they were sitting in on a meeting about extreme ultraviolet lithography technology -- the technology used to make advanced semiconductors -- and they had “no idea what they were making decisions over, because the technology is so complex.”

It’s important to develop a “workforce here in Washington that is technology literate, bringing people from the private sector into government for short stints and so on,” Goodrich said. “At the end of the day, the government should be making those decisions for national security, and we have to ensure that the national security definition is well defined.”