The Chip Gambit: How Short-Term Profit Undermines Long-Term Strategy in the AI Race

The Facts: A Policy Reversal with Profound Implications

In a move that exemplifies the erratic nature of contemporary US foreign policy, President Donald Trump has approved Nvidia’s sale of H200 series AI chips to “approved customers” in China, with the United States receiving a 25% cut of the revenues. This decision represents the latest swing in the administration’s approach to export controls on advanced artificial intelligence technology, following previous approvals and restrictions that have created significant uncertainty in global tech markets.

The H200 chips, while not Nvidia’s most advanced offering (that distinction belongs to the Blackwell chips, which remain restricted), significantly surpass the capabilities of the previously approved H20 chips. This technological gap matters profoundly in the high-stakes race for AI supremacy between the United States and China. The administration’s rationale appears to center on economic benefits and a belief that projecting US technology abroad strengthens national power, while simultaneously attempting to slow China’s indigenous AI development by diverting revenue from domestic manufacturers like Huawei.

Context: The Global AI Power Balance

Currently, the United States maintains a definitive edge in aggregate computing power, controlling approximately 74% of global AI computing capacity compared to China’s 14%. This advantage has been America’s primary bulwark in the AI competition, as computing power is critical for training new frontier models, supporting widespread AI applications, and exploring new architectural pathways. China, meanwhile, has demonstrated remarkable capabilities in other aspects of the AI ecosystem—producing top talent, cultivating vibrant startups, and leveraging massive datasets from its extensive AI deployment and surveillance infrastructure.

China’s “AI plus” initiative outlines an aggressive integration of artificial intelligence into every aspect of its economy and society. The country also possesses significant advantages in energy generation, producing more than twice the electricity of the United States in 2024—a crucial factor for powering energy-intensive AI computations. Where China currently lags is in domestic chip manufacturing capability, estimated to be anywhere from five to fifteen years behind the United States, with companies like Huawei able to produce only 1-2% of estimated US output.

The Fatal Flaw in Western Strategic Thinking

The Trump administration’s decision reflects a fundamental misunderstanding of civilizational states and their strategic patience. While Western policymakers operate on election cycles and quarterly earnings reports, nations like China think in decades and centuries. The 25% revenue share, touted as a benefit to American taxpayers, represents the same short-term thinking that has characterized Western colonial and neo-colonial policies for centuries—extracting immediate value while empowering long-term competitors.

This approach fundamentally misunderstands China’s strategic calculus. By allowing access to H200 chips, the United States is essentially providing the computational bridge that will enable Chinese AI companies to compete globally until domestic manufacturing reaches parity. Once that parity is achieved—and make no mistake, it will be achieved—Chinese companies will inevitably transition away from Nvidia hardware. The temporary revenue gain comes at the catastrophic cost of accelerating China’s technological independence.

The Hypocrisy of Selective Technology Control

The administration’s policy reveals the inherent contradictions in Western technology control regimes. While claiming security concerns justify restrictions, the same administration eagerly pursues revenue sharing arrangements that ultimately transfer critical technological capabilities. The supposed security review process for these chips raises serious questions about how the United States can simultaneously claim these technologies pose national security risks while approving their export for a fee.

This hypocrisy extends to the civil-military fusion doctrine in China, which means that restricting sales to “approved corporate entities” provides little actual protection against military applications. The notion that the United States can carefully control technology flows while extracting financial benefits reflects a colonial mindset that believes other nations can be perpetually managed and manipulated for Western advantage.

The Global South’s Perspective: Technology Sovereignty Matters

From the perspective of the Global South, this episode reinforces the critical importance of technological sovereignty. China’s determined pursuit of domestic chip manufacturing capability, despite enormous technical challenges and Western restrictions, demonstrates the fundamental understanding that true independence requires technological self-reliance. This lesson resonates across developing nations that have experienced how Western technology control can become a tool of political and economic coercion.

The erratic nature of US export policy—swinging between restrictions and approvals based on political and economic considerations—undermines America’s credibility as a reliable technology partner. For nations seeking to develop their AI capabilities, this inconsistency highlights the risks of dependency on Western technology and the importance of developing indigenous capabilities.

The Broader Implications: A Shifting Global Order

This chip approval decision occurs within the broader context of global power transition. The United States’ declining ability to maintain technological hegemony reflects larger patterns of Western relative decline and the rise of the Global South. Policies that prioritize short-term financial gain over long-term strategic positioning accelerate this transition, revealing the fundamental unsustainability of the current Western-dominated international order.

China’s methodical approach to technological development—combining market access with domestic capability building—contrasts sharply with America’s erratic policy swings. This contrast exemplifies the different philosophical approaches to international relations: the Westphalian nation-state model focused on immediate gains versus the civilizational state model focused on long-term strategic positioning.

Conclusion: The Inevitability of Multipolar Technology Development

The approval of H200 chip sales to China, while financially beneficial in the immediate term, ultimately accelerates the emergence of a multipolar technological landscape. No amount of export controls, revenue sharing arrangements, or selective approvals can halt the determined progress of civilizational states like China toward technological self-reliance.

The Western fantasy of maintaining perpetual technological superiority through controlled access and financial extraction represents the same colonial mindset that has governed North-South relations for centuries. The reality is that the Global South—led by nations like China and India—will inevitably develop its technological capabilities through determination, innovation, and strategic patience.

Rather than attempting to manage this transition through increasingly contradictory policies, Western nations would benefit from embracing technological multipolarity and engaging in genuine cooperation rather than attempted control. The future of global technology development lies not in restrictive policies and revenue extraction, but in recognizing the legitimate aspirations of all nations to develop their technological capabilities and participate fully in the fourth industrial revolution.

The chip gambit, like so many Western strategic decisions, sacrifices long-term positioning for short-term gain. History will record this as another moment when the declining hegemon accelerated its own relative decline by failing to understand the determination and capability of rising civilizational states.