The U.S. is losing the chip war to China? Trump's fresh strategy can be a costly mistake

The technological war between the United States and China is entering a new, amazing phase. Donald Trump's administration, changing its strategy of hard sanctions to date, decided on a risky maneuver: it allowed China to sale weaker versions of American AI chips. Washington believes this will make the Chinese marketplace dependent on its technology. However, analysts specified as Alex Lo with South China Morning Post, inform that this maneuver is doomed to failure and can only accelerate the technological improvement of Beijing's self-sufficiency.

Washington's fresh tactic: To become addicted by selling a worse product

After years of intense pressure, including export restrictions and sanctions on Chinese technology companies, The White home led by Trump concluded that the policy so far has the other effect. alternatively of slowing down, tough sanctions mobilised China to rapidly rebuild its own semiconductor manufacture and make independent supply chains.

In response, the Trump administration 2.0 adopted a fresh strategy. Companies specified as Nvidia and AMD received green light for sale to China their low performance chips, specified as Nvidia H20 and AMD MI308. U.S. Trade Secretary Howard Lutnick explained the logic of this move: “We want the Chinese to proceed utilizing the U.S. technology stack due to the fact that they are inactive relying on it. The thought is to sale them adequate to make their developers addicted to our technology.”

Treasure Secretary Scott Bessent claims that the fresh strategy is already working, and Beijing fears that Nvidia's chips will become a standard in China. But the devil, as usual, is in the details.

Why is this strategy doomed to fail?

In his analysis, Alex Lo compares this maneuver to trying to drug individual by offering him the weakest substance, not the strongest substance. This approach contradicts logic and ignores technological realities.

The key problem lies in the efficiency of the chips offered. Let's look at the comparison:

• Nvidia H20 (offered to China): Calculation power at level 148 Tflops and memory bandwidth 4 Tbps.
• Huawei Ascend 910C (now produced in China): Calculation power 780 Tflops and capacity 3.2 Tbps.

The numbers talk for themselves. The Chinese chip is more than 5 times more efficient in computing power. In this context, the American H20 looks like a technological counterpart of methadone – a substitute that cannot compete with a complete product. Although memory bandwidth in the Nvidia chip is somewhat higher, this does not compensate for the immense difference in computing power, crucial for the improvement of artificial intelligence.

Moreover, the best Nvidii chips, specified as GB200 (2500 Tflops) is H100 (989 Tflops), stay unavailable for China. Offering much weaker versions will not make Chinese companies abandon their more powerful solutions.

American chips as a temporary solution

Chinese companies can buy American H20 chips for 1 reason: availability. National producers, specified as SMIC, are constantly scaling production and are incapable to meet the gigantic home demand. Therefore, Beijing requires companies to justify why they choose imported, weaker layouts alternatively of home ones.

It is all indications that H20 and MI308 will only service China as temporary pushers until local giants increase their production capacity. alternatively of becoming an obstacle, American chips can prove to be an unexpected aid, giving the Chinese manufacture time to make without being completely cut off from supplies.

Washington, trying to play a clever chess game, can unwittingly aid his top rival. As Lo concludes, the United States has already lost this "dirty chip war", but they do not know it yet. The real conflict will take place in the field of innovation, not by selling outdated technology.

Source: Alex Lo, Washington has already lost dirt chip war but does not know it yet, SCMP, 17.08.2025

Leszek B. Glass

Email: [email protected]

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