The Nvidia CEO’s Quest to Sell Chips in China

Summary

The Journal: "The Nvidia CEO’s Quest to Sell Chips in China"

Podcast: The Journal.
Hosts: Jessica Mendoza, Ryan Knutson
Guests: Ling Ling Wei (Chief China Correspondent, WSJ)
Date: August 18, 2025

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Episode Overview

This episode explores Nvidia CEO Jensen Huang’s complex efforts to maintain and expand Nvidia’s business in China amid escalating US-China trade tensions, new export controls, and shifting political landscapes. It highlights Huang's evolution from a traditional tech executive to an active diplomatic figure, navigating the difficult balance between global business interests and national security concerns.

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Key Discussion Points and Insights

1. Background: Nvidia's Rise and Growing Importance in AI (00:24 – 01:35)

• Nvidia is now the world's most valuable company, thanks to its dominance in advanced AI chips.
• The company’s chips are foundational to large AI models, putting it at the heart of global technology competition.
• Quote:
  "Nvidia chips power some of the biggest AI models in the world... it's also found itself in the middle of a tense trade battle between the US and China." – Jessica Mendoza (00:48)

2. US Export Controls and Market Challenges in China (02:16 – 03:20)

• US government imposed strict rules, limiting Nvidia’s ability to sell its most advanced chips to China, citing national security.
• As a result, Nvidia’s market share in China dropped dramatically.
• Quote:
  "Nvidia's market share in China was about 95% four years ago. It's about 50% today because of the limitations on the products that we sell." – Jensen Huang (03:10)

3. Innovation Under Pressure: The H20 Chip (03:20 – 04:26)

• Nvidia developed the H20 (Edge 20) chip, a less powerful AI chip, designed to meet US export restrictions but still sellable in China.
• The chip isn’t suitable for the most advanced AI models, but is still useful for AI inference tasks.
• Quote:
  "They're not the most advanced chips... many engineers and experts say the chip is still good at inference." – Ling Ling Wei (03:26)

4. Political Maneuvering and Lobbying (04:26 – 05:53)

• When the Trump administration considered banning the H20, Jensen Huang personally lobbied both US and Chinese officials.
• He attended a $1 million-per-head dinner with President Trump at Mar-a-Lago to plead Nvidia’s case, arguing US restrictions would only accelerate China’s domestic chip development.
• Elon Musk countered Huang’s argument, emphasizing risks to US tech leadership from ongoing sales to China.
• Quote:
  "Selling the H20 chip in China wasn't really a threat to national security... cutting off China from US Tech would only accelerate China's own domestic chip development..." – Ling Ling Wei (05:08) "Musk presented a counterargum, which was... any chip... in the Chinese hands, could have threatened US Technology leadership." – Ling Ling Wei (05:53)

5. Trump’s Decision and Its Implications (06:47 – 08:10)

• Trump initially banned the H20 in China, but was personally fond of Huang and lauded him at public events, calling him a "winner".
• Ultimately, Trump reversed the ban but demanded a 15% cut of Nvidia’s China chip sales for the US government—a move raising legal and ethical questions.
• Memorable Moment:
  "Jensen, will you stand up? What a job. What a job you’ve done, man." – Donald Trump, quoted by Jessica Mendoza (07:23)
• Controversy:
  "So do you mean that national security is for sale now?" – Ling Ling Wei (08:31)
• Legal experts question whether the 15% fee is lawful under the Export Control Act, and whether such a deal constitutes extortion.

6. The China Side: Dealmaking and Diplomatic Tightrope (10:44 – 13:35)

• Huang took multiple trips to China, courting top officials and earning the nickname "Magic Tailor" for tailoring chips to US export rules.
• His public praise for China and critique of US policy charm Chinese officials but raise eyebrows in Washington.
• Chinese authorities paused an antitrust probe of Nvidia and approved a $35 billion software deal, but expect Huang to lobby against US legislation that could impose tracking features in future chips.
• Quote:
  "China has also increased pressure on the company. They want Huang to keep lobbying Washington for loosened export controls..." – Ling Ling Wei (13:18)

7. Beijing-Mandated Pressure and Mutual Suspicion (14:20 – 15:32)

• Chinese regulators are wary that Nvidia’s chips could include backdoors for US tracking.
• Nvidia denies any such vulnerabilities.
• Quote:
  "The Chinese are really worried that Nvidia's H20 chips could contain so-called backdoors..." – Ling Ling Wei (14:33)

8. Winners and Broader Implications (15:32 – 17:19)

• China gains leverage: The reversal of the H20 ban sets a precedent, making export restrictions negotiable for the first time.
• For Nvidia and Huang, the episode signals that leading a global tech company now requires diplomatic skills and the ability to navigate geopolitical conflict.
• Quote:
  "Being the CEO of a major American tech company is no longer just about focusing on innovation and shareholder value. It's also about being able to conduct high stakes diplomatic tasks." – Ling Ling Wei (16:18)

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Notable Quotes & Memorable Moments

• On Market Shifts:
  "Nvidia's market share in China was about 95% four years ago. It's about 50% today because of the limitations..." — Jensen Huang (03:10)

• On US-China Complexities:
  "He's basically taking on this dual role as both the CEO... and a diplomat of sorts trying to navigate... the US and China." — Ling Ling Wei (01:53)

• On Political Favor:
  "Trump really likes Huang and thinks that he's one of those, quote, winners." — Ling Ling Wei (06:56)

• On Precedent-Setting Deal:
  "Export controls were not something that was negotiable. And now people say the old playbook is out of the window." — Ling Ling Wei (15:32)

• On the CEO's New Role:
  "Being the CEO... is also about being able to conduct high stakes diplomatic tasks." — Ling Ling Wei (16:18)

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Timestamps for Key Segments

• Nvidia’s Market & Tech Context: 00:24 – 01:35
• Export Controls and the H20 Chip: 02:16 – 04:26
• Lobbying the US and China: 04:26 – 06:47
• Banning and Reversing H20 Sales: 06:47 – 08:10
• Controversial 15% Government Cut: 08:10 – 09:47
• Nvidia’s Diplomatic Tightrope: 10:44 – 13:35
• Beijing’s New Pressure & Security Concerns: 14:20 – 15:32
• Long-term Implications and Lessons: 15:32 – 17:19

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Summary

Jensen Huang’s quest to sell Nvidia's chips in China illustrates the new reality for tech giants: business success increasingly demands diplomatic savvy, political connections, and a willingness to walk geopolitical tightropes. While Nvidia and China both emerge as winners in this round—gaining capital and leverage, respectively—the episode leaves open urgent questions about export law, national security, and the unprecedented power now wielded by private sector leaders on the global stage.

Transcript

[Jessica Mendoza]

Our colleague Ling Ling Wei is the chief China correspondent for the Wall Street Journal. And lately she's had to learn a lot about tech, specifically semiconductor chips.

[Ling Ling Wei]

I'm getting a crash course over chips. Seriously, I'm really fascinated myself.

[Jessica Mendoza]

In particular, Ling Ling has been reporting on one Tech CEO Jensen Huang.

[Ling Ling Wei]

Jensen Huang is the CEO of Nvidia, a California based chip designer. Nvidia is the most valuable company in the whole world right now. With a market capitalization of over $4.

[Jessica Mendoza]

Trillion, Nvidia chips power some of the biggest AI models in the world. And as the company has become more important in the race for artificial intelligence, it's also found itself in the middle of a tense trade battle between the US And China. Ling Ling says that's meant a new role for the tech company's CEO.

[Ling Ling Wei]

Huang. For many years, he had largely avoided the rough and tumble world of politics in Washington. He mostly delegated the messy task of lobbying to some of his key underlings. But that started to change after Trump won the election late last year.

[Jessica Mendoza]

Huang has been busy lobbying both Washington and Beijing. Now he's looking at a massive deal for his company worth billions of dollars. The deal could reshape how companies navigate business with the US Government. And it's transformed the Nvidia CEO into a major player in geopolitics nowadays.

[Ling Ling Wei]

He's basically taking on this dual role as both the CEO of the most valuable, one of the most powerful tech companies in the whole world, and a diplomat of sorts trying to navigate the very complex relationship between the US And China.

[Jessica Mendoza]

Welcome to the Journal, our show about money, business and power. I'm Jessica Mendoza. It's Monday, August 18th. Coming up on the show, Jensen Huang is walking a fine line between the US And China. And he stands to make billions as the world embraces AI. Nvidia's business has soared, but the company has faced setbacks in one of its key markets, China. That's because the US has restricted sales of advanced computer chips to China, citing national security concerns. Jensen Huang talked about this recently in a CNBC interview.

[Jensen Huang]

Nvidia's market share in China was about 95% four years ago. It's about 50% today because of the limitations on the products that we sell.

[Jessica Mendoza]

The restrictions forced Nvidia to get creative and design a chip that could be sold in China.

[Ling Ling Wei]

The Edge 20 chip was created by Nvidia as kind of a less powerful chip specifically for the Chinese market to comply with existing US Export controls. They're not the most advanced chips. Nvidia has the Edge 20 chips cannot be used for, for example, creating large AI models such as the ones powering ChatGPT and other chat bots. However, many engineers and experts say the chip is still good at inference. Basically, that's the kind of ability of AI programs to tap their training to answer user questions.

[Jessica Mendoza]

And so the idea was Jensen Huang and Nvidia built this chip specifically to comply with U.S. regulations so that they could still access the Chinese market. Was the White House satisfied with the H20 as a product?

[Ling Ling Wei]

Initially, they were not. Back in April, the Trump administration basically sent out signals they were going to ban Sales of H20 chips to China based on national security concerns. So that set off frenetic lobbying effort attempt by Jensen Huang.

[Jessica Mendoza]

Ling Ling and other Journal reporters spoke to current and former officials in both the US And China and people familiar with Huang and his lobbying efforts. They learned that Huang attended a dinner with the President at Mar a Lago, which cost a million dollars per head. And at that dinner, Huang Huang made his case.

[Ling Ling Wei]

He told the President that selling the H20 chip in China wasn't really a threat to national security. And he also said basically that cutting off China from US Tech would only accelerate China's own domestic chip development, ultimately harming American leadership in the long run. That's his argument. The gist of his argument.

[Jessica Mendoza]

To sweeten the deal, Huang offered Trump a big incentive. A $500 billion investment in AI infrastructure in the United States. Trump welcomed the investment, but he still didn't budge on the H20 chip ban. That's in part because there was another tech CEO making a counterpoint.

[Ling Ling Wei]

Guess who intervened? It was Elon Musk, who at the time was still close to Trump. And Musk presented a counterargum, which was, you know, any chip, even though not as powerful as the most advanced chip in the Chinese hands, could have threatened US Technology leadership. If you keep selling American technology to China, that runs the risk of China potentially using the know how and products against America someday. And that view, combined with opposition from national security minded officials, persuaded Trump to impose the restriction Jensen Huang had tried to stop.

[Jessica Mendoza]

Okay, so Trump did wind up banning the sale of the H20 chip. But were there any hints at all that Trump was like warming to Huang's charm offensive?

[Ling Ling Wei]

Absolutely. Jensen Huang really has been quite successful in terms of building a relationship with the president based on reporting. Trump really likes Huang and thinks that he's one of those, quote, winners.

[Jessica Mendoza]

In July, Huang, along with other tech CEOs, attended an AI summit in D.C. trump delivered a keynote address and throughout his Speech. He called out to Huang in the.

[Jensen Huang]

Audience, Jensen, will you stand up? What a job. What a job you've done, man.

[Jessica Mendoza]

Trump praised Huang several times.

[Jensen Huang]

He started as very small, and now he's really become very amazing.

[Ling Ling Wei]

So he really has come to view Jensen as one of those winners and somebody he liked to consult with on policy matters and other issues.

[Jessica Mendoza]

Eventually, Huang got his big win. Trump reversed the ban on sales of the H20 chip in China. It was a huge break for Nvidia. Its stock immediately ticked up, helping the company crack a $4 trillion valuation.

[Ling Ling Wei]

But there was still one hitch.

[Jessica Mendoza]

Trump had one more demand. He wanted a cut of the sales. Nvidia and another chip company that was also given the go ahead to sell in China will have to pay a 15% cut of their chip sales in China to the US government. How unusual is this proposal coming from the Trump administration?

[Ling Ling Wei]

So the 15% cut sparks two major concerns. First, is it even legal? Because there is an Export Control act back in 2018 clearly states no fee may be charged in connection with any application for license, meaning an export license. And the second issue here is potentially more alarmingly, many experts have warned that this could function as a form of extortion. So do you mean that national security is for sale now? Does that suggest sensitive technology could be sold to a rival like China, provided the company makes a large enough payment to the US Government? So it's been hugely controversial and definitely raising a bunch of legal and security questions. And we're going to see if this decision, this deal would be challenged in court.

[Jessica Mendoza]

Do we have any idea what the revenue from this 15% cut might be going towards?

[Ling Ling Wei]

No idea. Okay, no idea. Simple answer.

[Jessica Mendoza]

Neither the Trump administration nor Nvidia have released details of the agreement. People close to them say many of the details in the financial structure still need to be worked out. A White House spokesman said that the President regularly talks to business leaders like Huang. He added, quote, the only special interest guiding the President's decision making is the best interest of the American people. It's taken months of negotiations with the White House for Huang to score this agreement. But winning over Trump was only half the battle. We'll be right back. U.S. trade policy hasn't been the only roadblock for Nvidia's business in China. Nvidia has also had to convince officials in Beijing to clear a path for its chips.

[Ling Ling Wei]

Jensen this year has made at least three trips to China, and he has met with very senior Chinese officials, including leader Xi Jinping's right hand man on the Economy Vice Premier He Lifung Nvidia.

[Jessica Mendoza]

Is quite popular in China, and Huang even has a nickname there, the Magic Taylor. That's because of his unique skill at designing chips that manage to thread the needle of US regulations, like the H20 chips. When Trump agreed to reverse the ban on selling those chips to China, Huang was already in Beijing.

[Ling Ling Wei]

Jensen himself announced that the US government had decided to lift the ban on H20 sales to China. And he did press briefings with Chinese and Western reporters. And during those briefings, he really praised China's technological achievement. To the skies.

[Jensen Huang]

You're rich with science and math and computer science, and it's very unique. So the ecosystem is quite dynamic. It's moving very fast, and I'm just very happy to be here.

[Ling Ling Wei]

And at the same time sounded very critical of the US Policy. So that wasn't received very well by many people in Washington. But the Chinese loved him.

[Jessica Mendoza]

It sounds like Huang. Jensen Huang has to walk a really fine line to make sure that he doesn't upset either China or the US Too much, but also is able to sort of cater to each side so that he's telling them what they want to hear.

[Ling Ling Wei]

Yes, it's a super tightrope. And not only tightrope, but shifting sand too.

[Jessica Mendoza]

Right.

[Ling Ling Wei]

Because policies keep changing in both the US And China. You really don't know when things would just turn on a dime. So, you know, it's definitely a very high stakes effort for Huang.

[Jessica Mendoza]

Huang's efforts with the Chinese seem to be paying off. The Chinese government has paused an antitrust probe that had opened into Nvidia late last year. Beijing also approved a $35 billion deal involving U.S. chip software makers that had been held up for the last year. But once again, there's a hitch. Ling Ling says these moves by Beijing come with strings attached.

[Ling Ling Wei]

Knowing the importance of the Chinese market to Nvidia, China has also increased pressure on the company. They want Huang to keep lobbying Washington for loosened export controls, to keep lobbying Congress.

[Jessica Mendoza]

What else do the Chinese want? I mean, Trump already said he'll ease up on the H20 chip sales.

[Ling Ling Wei]

There is some proposed legislation in Washington to require tracking capabilities for advanced chips sold abroad. China doesn't like that idea. And China knows that Huang and others in the tech industry in the United States have lobbied against the bill, but they still do believe that the bill has a chance of passing. So they're amping up the press on Jensen Huang and other tech companies in the United States and hoping that those lobbying efforts could help kill the bill.

[Jessica Mendoza]

All this talk in Congress about using chips to track what China is up to has started to raise suspicions in Beijing. Last month, Chinese regulators called Huang to find out whether the H20 chips could be compromised.

[Ling Ling Wei]

The Chinese are really worried that Nvidia's H20 chips could contain so called backdoors, which basically in their views could allow for tracking, locating, and even remotely disabling the chips. And the fear is that, you know, reliance on U. S made trips with such vulnerabilities could compromise the security of China's data and critical infrastructure.

[Jessica Mendoza]

An Nvidia spokesperson said the company does not have backdoors in its chips that would give anyone a remote way to access or control them. Calling cybersecurity critically important, Nvidia, Trump and China all seem satisfied with the deal to lift the ban on H20 sales. China gets access to Nvidia's chips, Nvidia gets to do business with China, and the Trump administration gets a cut of the sales. But in the grand scheme of things, Lingling says there's a case to be made that China is the biggest winner here.

[Ling Ling Wei]

This H20 ban reversal really is a watershed moment in US policy because up until the H20 ban reversal, export controls were not something that was negotiable. And now people say the old playbook is out of the window. The Chinese now get to negotiate with the US over export controls. And that gives the China a powerful lever in future negotiations with the US Government.

[Jessica Mendoza]

And what about Jensen Huang? You know, he's been at the center of all of this. What does this moment mean for him, this whole saga?

[Ling Ling Wei]

It just shows how treacherous it has become for corporate leaders like Huang himself. You know, to navigate such a complex landscape where economic interests in the crucial Chinese market come into conflict with US national security concerns. Being the CEO of a major American tech company is no longer just about focusing on innovation and shareholder value. It's also about being able to conduct high stakes diplomatic tasks. For now, Huang is winning. But can he keep winning, especially given the heightened scrutiny over tax sales to China? That's really the big question.

[Jessica Mendoza]

That's all for today. Monday, August 18 the Journal is a co production of Spotify and the Wall Street Journal. Additional reporting in this episode by Rafael Huang, Amrit Ramkumar and Robbie Whelan. Thanks for listening. See you tomorrow.