A U-turn in the chip war? The Nvidia H200 decision: Why Trump might suddenly release Nvidia's super chip to China

Security risk or strategy? The dangerous game with high-performance chips for Beijing

In the geopolitical nerve centers of Washington, a strategic shift is brewing that could redefine the balance of power between the world's two largest economies. For years, under the Biden administration, the dogma of strict containment prevailed: highly advanced technology, particularly in the field of artificial intelligence, was not to fall into Beijing's hands under any circumstances, so as not to jeopardize US national security. But under President Donald Trump, this rigid paradigm now appears to be softening. At the center of this geopolitical storm is a tiny but powerful piece of silicon: Nvidia's H200 chip.

The US Department of Commerce is currently considering easing export restrictions that would allow these powerful AI accelerators to be sold to Chinese customers again. This potential decision is far more than a trade formality; it is the direct result of the “Busan Declaration,” a diplomatic truce between Trump and Xi Jinping, and marks the transition from ideological confrontation to transactional pragmatism. Technological sovereignty is no longer viewed as an inalienable asset, but rather as a bargaining chip in a complex game over raw materials, particularly rare earth elements, and economic stability.

While tech giants like Nvidia and investors are hoping for the opening of China's $40 billion AI market, security experts are sounding the alarm. They warn that the supply of H200 chips could dramatically accelerate China's military capabilities—from autonomous weapons systems to cyber warfare. The following article examines the profound implications of this potential course correction: It analyzes the risky balance between economic interests and national security, the role of tech alliances in the Middle East, and the danger of long-term fragmentation of the global semiconductor market. We are at a crossroads where it will be decided whether technology builds bridges or definitively divides the world into rival blocs.

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Trade war in transition: The normalization of technology exports to China

The US Department of Commerce is currently reviewing a fundamental overhaul of its export control policy for artificial intelligence chips, which could significantly alter commercial relations between the United States and China. Specifically, Nvidia's H200 chips are the focus of a review that could loosen previously strict restrictions on the sale of advanced semiconductor technology to mainland China. These considerations mark a clear break with the previous strategy, implemented under the Biden administration as a safeguard for national security interests, which systematically restricted China's access to sophisticated AI infrastructure.

The Trump administration has increasingly distanced itself in recent months from the confrontational stance of the previous administration, instead seeking pragmatic solutions that consider both economic interests and geopolitical stability. The potential approval of H200 sales to Chinese customers signals a new phase in the bilateral relationship, in which technological dependence is no longer seen solely as leverage, but rather as a bargaining chip in a complex economic policy game. Nvidia itself has repeatedly emphasized that current regulations prevent the company from offering competitive AI data center chips in China, thus ceding this massive market to rapidly growing foreign competitors.

This development raises fundamental questions about the long-term effectiveness of technology export controls as a foreign policy instrument. While short-term restrictions may delay the development of Chinese AI systems, they simultaneously accelerate the development of domestic alternatives and strengthen the competitiveness of other providers. The Chinese semiconductor market has demonstrated remarkable resilience over the past three years despite extreme US sanctions, with investments exceeding $150 billion in local chip production and the development of proprietary architectures. The Trump administration's decision to now consider opening up could therefore be interpreted as a strategic reassessment acknowledging the reality that complete technological isolation is unlikely to succeed and that controlled cooperation could instead create new opportunities for influence.

Between ceasefire and arms smuggling: The Busan Declaration and its consequences

The backdrop to these current considerations is the agreement brokered last month in Busan by President Trump and Chinese President Xi Jinping, which established a temporary truce in the ongoing trade and technology war between the two nations. This meeting marked a significant turning point after years of escalating tensions, tariffs, and reciprocal trade restrictions. The Chinese side had repeatedly emphasized that normal trade relations could not be restored without lifting the technological blockade, while the US side insisted on the need to protect national security.

The Busan Declaration, although publicly formulated only in vague terms of cooperation, apparently created a framework for targeted negotiations on sensitive technology transfers. The potential release of the H200 chip is the first concrete result of this diplomatic process and signals that the Trump administration is prepared to make concessions on the chip issue in order to achieve broader economic and geopolitical goals. This calculation is based on the understanding that the ongoing export restrictions weaken not only Chinese but also US companies that depend on the Chinese market.

The historical dimension of this shift becomes clear when one considers the evolution of US export control policy since 2018. The phase of inclusive sanctions, intensified by the Biden administration, culminated in sweeping restrictions on semiconductor manufacturing equipment, design software, and specialized components. These measures aimed to delay China's ability to develop advanced AI systems by five to seven years. However, the current reassessment suggests that these timeframes may have been overly optimistic, or that the cost of this strategy to the US economy outweighs the anticipated security benefits. The semiconductor industry has repeatedly warned of the long-term consequences of permanent exclusion from the Chinese market, particularly given that China invests over $400 billion annually in chip imports and is increasingly meeting this demand through domestic suppliers, thereby eroding the global market position of American companies.

The security dilemma of chip exports: Military use versus economic damage

The security concerns surrounding a potential release of the H200 chips focus on the People's Republic of China's potential military applications of these advanced AI processors. Critics in Washington, particularly within the Pentagon and intelligence agencies, argue that any further performance upgrades China makes to its AI infrastructure could directly contribute to the modernization of its armed forces, the development of autonomous weapons systems, and the enhancement of its cyber capabilities. The fear is that advanced AI chips will not only enable civilian applications in research, business, and administration, but also accelerate military decision-making and significantly increase the effectiveness of autonomous systems.

Nvidia's H200 chips represent a generation of processors specifically designed for training large AI models and inference-based data processing in data centers. With significantly increased memory bandwidth and improved parallel processing capabilities, these chips can train complex neural networks in fractions of the time required by previous models. From a security perspective, this means that Chinese military research institutions and state-controlled tech companies could gain the capability to develop AI models for strategic analysis, pattern recognition in surveillance data, and the optimization of logistical operations—applications previously limited by computing power constraints.

The Trump administration faces a complex balancing act here. On the one hand, there is pressure to protect national security and preserve technological advantages. On the other hand, experience in recent years shows that complete embargoes often lead to undesirable side effects. The Chinese development of its own chip architectures, spearheaded by companies like Huawei with its Ascend processors and Cambricon with specialized AI chips, has accelerated rather than slowed down due to the sanctions. The quality of these domestic alternatives is slowly but steadily approaching the level of American and Taiwanese competitors. Controlled market access could therefore be strategically more sensible than a complete exclusion, which only encourages the development of competing ecosystems. The challenge lies in designing a regulatory framework that permits commercial use but effectively prevents military applications—a distinction that is extremely difficult to implement in practice.

Rare earths in return: The asymmetric dependency of the tech industry

The considerations surrounding the release of H200 are directly related to China's dominance in rare earths and critical minerals essential for modern technology production. China controls the mining and processing of over 80 percent of global rare earth production, which is used in nearly every electronic device, from smartphones and electric vehicles to military systems. The Chinese government has repeatedly made it clear that it can use this strategic advantage as a countermeasure in trade disputes, placing the technology industries of the United States and its allies in a precarious position of dependency.

The Trump administration repeatedly threatened export restrictions on technologies China needs in 2025, but in most cases withdrew these threats after Beijing made it clear that countermeasures in the rare earth sector were inevitable. This strategic stalemate creates a framework in which both sides seek compromises that reduce their respective dependencies. The potential release of H200 could be part of a tacit deal in which the US receives concessions in mineral supply or cooperation in other technological areas in return. This type of asymmetric barter is increasingly becoming the norm in relations between the world's two largest economies.

The economic implications of these dependencies are considerable. The US technology industry imports over $20 billion worth of materials annually from China, materials essential for semiconductor manufacturing, battery production, and renewable energy. A supply disruption or significant price increases would jeopardize the cost structure of the entire American tech sector and drive inflation in sectors crucial to US competitiveness. The Chinese side is aware of this and deliberately uses this dependency as leverage in negotiations. The H200 permit could therefore be interpreted as the price for stable supply chains and fair prices for critical minerals. This dynamic interdependence demonstrates how traditional instruments of power, such as export controls, in a globalized economy lead to complex negotiation scenarios where both sides have leverage and a purely zero-sum game becomes impossible.

Technological performance differences: H200, H20 and the benchmark for AI capabilities

The technological specifications of the H200 chips illustrate why their release is so controversial. The H200 is the successor to the H100, which is already considered the standard processor for training large AI models. The H200 offers significantly increased memory capacity and bandwidth, making it particularly valuable for complex workloads in data centers. It is estimated that the H200 is roughly twice as powerful as the H20, which is currently the most advanced AI semiconductor component that can be legally exported to China. The H20 was specifically developed as a scaled-down version for the Chinese market after the initial export bans on the H100 and H200 were imposed.

The differences in computing power are not merely theoretical. In practice, double the performance means that training processes for large language models or complex simulation environments can be completed in half the time. This time saving translates directly into cost savings and a faster innovation cycle. For Chinese companies under pressure to compete with US and European rivals, access to H200 chips would be a significant competitive advantage. The question the Trump administration must answer is whether this advantage is so substantial that it would actually threaten US national security, or whether the commercial and diplomatic benefits of a controlled release outweigh the risks.

Technological development in AI hardware follows an exponential growth trajectory, making it difficult to make long-term predictions about relative advantages. While the H200 is currently considered cutting-edge technology, Nvidia, along with competitors like AMD, Intel, and a number of startups, are already working on next-generation AI chips that will increase performance tenfold. In this context, the H200 release could be seen as a tactical maneuver to reduce trade barriers in the short term without jeopardizing long-term US technological leadership. Despite massive government investment, the Chinese semiconductor industry still struggles with quality and scalability issues in advanced manufacturing processes. The time it would take for China to fully leverage the benefits of the H200 could be sufficient to develop the next generation of chips, which in turn would secure the US lead.

Alliance politics in the shadows: Saudi Arabia, the UAE and the new tech diplomacy

Recent developments in the Middle East provide further context for the H200 debate. This week, the US Department of Commerce approved the shipment of up to 70,000 Nvidia Blackwell chips, the next-generation technology following H200, to Saudi Arabia's Humain and G42 of the United Arab Emirates. This decision demonstrates the US government's willingness to export cutting-edge AI technology to partner countries deemed strategically important and politically reliable. Distinguishing between allies and potential competitors is a key aspect of the new technology diplomacy.

Cooperation with Gulf states in the field of AI technology is significant for several reasons. First, Saudi Arabia and the UAE represent important markets for US technology companies seeking to diversify their revenue streams given the instability in the Chinese market. Second, these countries serve as testing grounds for new technologies in areas such as smart cities, renewable energy, and automated logistics. Third, and this is particularly relevant geopolitically, they offer an alternative to Chinese investment in the region, which has increased massively in recent years due to the Belt and Road Initiative and other infrastructure projects.

Nvidia CEO Jensen Huang, whom Trump has repeatedly praised as a great entrepreneur and a key partner to the US economy, recently attended a state visit by Saudi Crown Prince Mohammed bin Salman to the White House. This symbolic gesture underscores the growing connection between technology companies and foreign policy interests. Huang understands how to balance the needs of his shareholders with the geopolitical goals of the US government. The Blackwell export licenses for the Middle East could serve as a precedent defining the conditions for future exports to China—tighter security checks, limited quantities, and clear documentation of intended use.

Alliance policy in the technology sector is increasingly becoming a key factor for global stability. The US must strike a difficult balance between strengthening allied nations, controlling potential adversaries, and advancing its own economic interests. The decision to supply Blackwell chips to Gulf states while simultaneously considering supplying H200 chips to China demonstrates a nuanced strategy that differentiates between countries based on their geopolitical status and their behavior on national security issues. This differentiated approach could, in the long run, lead to a fragmented global technology landscape in which different countries have access to varying levels of technology depending on how they are categorized by Washington.

Long-term consequences: The fragmentation of the global semiconductor market

The potential H200 approval is symptomatic of a profound transformation of the global semiconductor market that extends far beyond the bilateral relationship between the US and China. The past five years have accelerated a trend toward the fragmentation and regionalization of technology supply chains, driven by geopolitical tensions, pandemic-related supply bottlenecks, and growing national security concerns. Countries and regions are investing heavily in local manufacturing capabilities to reduce their dependence on foreign technology suppliers. The European Union has passed its European Chips Act with €43 billion in funding, South Korea plans to invest over $450 billion in its semiconductor industry by 2030, and Japan has announced government support for TSMC and local companies like Rapidus.

In this context, the H2O debate represents a strategic crossroads. Approval could slow fragmentation by reintegrating China into the global ecosystem of advanced AI hardware. This would protect the interests of companies like Nvidia, which benefit from a global market, and could lower the cost of AI development worldwide through economies of scale. On the other hand, it could undermine China's efforts to build a fully self-sufficient semiconductor industry and, in the long term, place the US in a position of technological dependence if China successfully establishes its own chip industry.

The geopolitical risks of such a decision are considerable. US allies, particularly Taiwan and South Korea, both key players in the global chip supply, are watching developments with growing concern. They fear that easing export controls could jeopardize their own security by giving China access to technologies that could potentially be used against them in military scenarios. Taiwan is especially sensitive, as it is the main production site of the world's most advanced chips and also represents the greatest security threat in the event of a Chinese invasion. South Korea, home to Samsung and SK Hynix, also has significant investments in China and depends on stable trade relations, as well as on US security guarantees.

The long-term consequences of the H200 decision will significantly shape the structure of global AI development. If the US leverages access to advanced AI hardware to achieve political objectives, other countries might accelerate their efforts to develop alternative sources of supply or create their own solutions. This development could ultimately lead to a world where multiple incompatible AI ecosystems coexist, hindering global collaboration in research and development and reducing the efficiency of the global innovation system. The paradoxical consequence could be that short-term security considerations lead to a less secure and more fragmented technological landscape in the long run.

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Economic calculations and industrial interests

The financial implications of the H200 export policy are immense and directly affect the profitability and market position of Nvidia, the leading provider of AI accelerators. The Chinese market for AI chips is estimated at over $40 billion annually and is growing at a rate of over 25 percent per year. The current ban on selling advanced chips like the H200 has forced Nvidia to develop specially adapted versions like the H20, which are significantly less profitable and weaken the company's market position against Chinese competitors like Huawei. Huawei has created an alternative platform with its Ascend chips and associated software stack, which is being increasingly adopted by Chinese companies and government agencies.

Margins for H200 chips are significantly higher than for the scaled-down H20 versions, as the latter require additional development costs and must be sold in a market where inexpensive alternatives are readily available. Analysts estimate that the average selling price margin for H200 chips is over 60 percent, while H20 margins fall below 40 percent. This difference translates into billions in losses for Nvidia and its shareholders if access to the Chinese market remains restricted. Furthermore, the need to maintain two separate product lines weakens Nvidia's ability to drive innovation, as resources are diverted to adaptation rather than further development.

The breadth of the economic impact, however, extends far beyond Nvidia. The entire US technology industry ecosystem, including cloud providers like Amazon Web Services, Microsoft Azure, and Google Cloud, benefits from a competitive global market for AI hardware. If Chinese companies are forced to switch to local alternatives, parallel infrastructures will emerge that are incompatible with US platforms. This fragmentation hinders the global expansion of American cloud providers and weakens Silicon Valley's position as a global innovation leader. The US technology trade balance has already suffered significantly under the sanctions over the past three years, and a reopening of the Chinese market could secure vital revenue streams for the entire industry.

The employment effects are also significant. The semiconductor industry in the US directly and indirectly employs over 1.8 million people, with average salaries well above the national median. Any measure that strengthens the competitiveness of American chip companies helps secure highly skilled jobs and encourages investment in research and development. While the $52 billion in CHIP Act funding provided by the Biden administration is substantial, it can only be successful in the long term if the companies that benefit from it remain competitive in global markets. A permanent loss of the Chinese market would undermine the economic basis for these investments and could place the US in a position of technological isolation comparable to that experienced by the Soviet Union during the Cold War.

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The role of corporate management and political influence

Jensen Huang, CEO and co-founder of Nvidia, has distinguished himself in recent years as a skilled navigator in the complex web of technology, politics, and global economic interests. His ability to maintain open channels of communication with both the Trump administration and Chinese government officials has placed Nvidia in a unique position to influence US export policy. Huang has been repeatedly praised publicly by the president and enjoys access to the highest levels of political decision-making, which is unusual for a tech CEO. This proximity to political power allows Nvidia to directly inject its corporate interests into the political process.

Huang's participation in the meeting with the Saudi Crown Prince at the White House is symptomatic of the growing convergence of tech interests and foreign policy. Nvidia not only has a commercial interest in export policy but also strategic influence on global AI development. The decision about which countries gain access to the most advanced AI chips is increasingly becoming a matter of national security and geopolitical alliances. Huang understands how to leverage these dimensions by positioning Nvidia as a national champion whose success is directly linked to the global competitiveness of the United States.

Nvidia's political influence transcends party lines. While Huang apparently maintains good relations with the Trump administration, the company has also worked extensively with Congress to emphasize the importance of the semiconductor industry to the U.S. economy. Nvidia's lobbying expenditures have doubled in the last three years and now exceed $10 million annually. These investments in political relationships pay off when it comes to overcoming complex regulatory hurdles and securing access to key markets. The current review of H200 export policy is a direct result of these efforts, as trade authorities are now forced to publicly acknowledge that existing regulations put Nvidia at a competitive disadvantage compared to Chinese and other foreign suppliers.

The link between corporate interests and national security policy also carries risks. Critics warn that overly close cooperation between tech giants and the government could lead to a form of technological corporatism, where the interests of individual companies override broader strategic planning. The H200 approval could bring Nvidia billions in the short term, but could worsen U.S. security in the long run if the chips are indeed diverted for military purposes. The challenge lies in creating governance structures that protect both the innovative power of the private sector and the security interests of the state. The current review by the Department of Commerce is a test case for whether this balance can be maintained in an increasingly complex technological landscape.

Legal and regulatory challenges

Implementing a new export policy for H200 chips presents the Department of Commerce with significant legal and regulatory challenges. Existing export controls are based on the International Emergency Economic Powers Act and the Export Control Reform Act, which grant the executive branch broad powers to regulate trade in goods deemed to be of national security importance. Any change to these regulations requires careful legal review to ensure it is legally sound and adequately considers the interests of all affected parties.

The complexity arises from the need to distinguish between legitimate commercial applications and potential military purposes. AI chips are inherently dual-use technologies, meaning they have both civilian and military applications. A data center training AI models for medical research or financial analysis could theoretically use the same capabilities for military simulations or weapons development. Regulators must therefore develop complex licensing procedures that monitor end-use and prevent misuse. However, these procedures are costly, difficult to enforce, and can hinder the legitimate business activities of companies.

The Commerce Department's legal review must also consider U.S. international obligations, particularly under the World Trade Organization and bilateral trade agreements. Discriminatory export controls that disadvantage individual countries can trigger trade disputes and provoke countermeasures. China has already filed a complaint with the WTO against previous U.S. export controls and could take further legal action if the new regulations are deemed unjustified trade barriers. The Trump administration must therefore navigate a complex web of national security, trade law, and diplomatic relations to find a sustainable solution.

Another legal aspect concerns the liability and responsibility of companies like Nvidia. If the chips are approved and subsequently diverted for military purposes, both the US government and Nvidia itself could suffer legal and reputational damage. The licensing terms must therefore include clear rules of accountability and audit rights that allow authorities to verify the end-use of the chips. However, implementing such a monitoring system is technically challenging and requires cooperation from Chinese end users, who may be unwilling to disclose sensitive operational data. These legal and practical hurdles explain why the review process is taking so long and why a final decision has not yet been reached.

The global competitive context: China's ambitious AI strategy

To fully grasp the significance of the H200 release, one must understand the breadth and depth of China's AI strategy. The Chinese government has declared AI a national priority and aims to become the world's leading AI hub by 2030. This ambition is supported by massive state investments, estimated at over $150 billion in the last five years. The Made in China 2025 program and the recent five-year plan envision the development of a fully autonomous semiconductor and AI industry, independent of foreign technology.

Chinese progress in AI applications is remarkable. Companies like Baidu, Alibaba, and Tencent have developed language models that can compete with Western counterparts. DeepSeek, a Chinese AI startup, recently released models that match or exceed the performance of GPT-4 in certain benchmarks. These developments are also driven by restrictions on access to US chips, which force Chinese companies to develop more efficient algorithms and make better use of their hardware. The Soviet Union's experience during the Cold War demonstrates that technological isolation can, in the long run, lead to innovative countermeasures that negate the initial advantages.

China's military AI development is a particularly sensitive area. The People's Liberation Army is investing heavily in autonomous weapon systems, AI-supported decision-making, and cyber warfare. Access to H200 chips could accelerate these developments, but experts disagree on the actual extent of the benefit. Some argue that China already possesses sufficient computing power to achieve its military objectives and that restrictions would only harm the civilian economy. Others warn that any additional computing power could be channeled directly into the development of more advanced weapons systems, shifting the military balance in the region.

The Trump administration's decision must therefore involve a complex calculation of risks and opportunities. On the one hand, allowing AI could help China develop its civilian AI applications more quickly, leading to greater economic interdependence and potentially having a stabilizing effect. On the other hand, it could accelerate military development and worsen the security situation for US allies in Asia. The challenge lies in finding regulatory mechanisms that promote civilian use while effectively preventing military applications. However, the history of dual-use export controls shows that such distinctions are extremely difficult to enforce in practice.

Economic interdependence and strategic autonomy

The debate surrounding the H200 permit reflects a fundamental dilemma of modern economic policy: how to maximize the benefits of global economic interdependence while preserving strategic autonomy in security-critical areas? The US has benefited in recent decades from the globalization of supply chains, which has reduced costs and accelerated innovation. However, the pandemic and geopolitical tensions have demonstrated that this interdependence also carries risks when critical goods depend on potentially rival states.

The Trump administration's strategy appears to aim at creating selective interdependence, maintaining commercial relationships in areas like consumer electronics and software while allowing controlled access to strategic technologies such as advanced AI chips. This approach recognizes that complete self-sufficiency is economically inefficient and politically unrealistic, but that complete openness creates national security risks. The challenge lies in finding the right balance, and the H200 release is a test case for this new kind of precision-guided globalization.

The economic costs of the current restrictions are substantial. Nvidia has repeatedly pointed out in its quarterly reports that the loss of the Chinese market is reducing overall revenues by up to 15 percent, resulting in downward pressure on its share price and a reluctance to invest. The broader U.S. semiconductor industry, including suppliers and design houses, is suffering comparable losses. The restrictions have also forced Chinese companies to make billions of dollars in investments in their own alternatives, which in the long run could lead to robust competitors that also compete with U.S. companies in other markets. The history of the Japanese and Korean auto industries shows how protectionist measures can ultimately lead to stronger foreign competitors.

The question of strategic autonomy, however, is more complex than mere economic cost-benefit analyses. The ability to be independent of foreign technology is a matter of national security and political sovereignty for both the US and China. The Chinese government has repeatedly emphasized that technological independence is a prerequisite for realizing the Chinese dream of national rejuvenation. The US, on the other hand, sees its technological leadership as an essential component of its global hegemony and its ability to set international norms and standards. The H200 release would mean that the US is prepared to trade some of this autonomy for economic advantages, representing a fundamental redefinition of the meaning of technological sovereignty.

A crossroads for the global technological order

The US Department of Commerce's review of H200 export policy marks a pivotal moment in the evolution of the global technology order. The decision on whether these chips can be sold to China will not only impact Nvidia's commercial prospects and US security, but also set a precedent for the future of technology-driven foreign policy. It signals whether the US is prepared to shift from a strategy of technological isolation to one of controlled coexistence.

The complex considerations surrounding this decision demonstrate that there are no easy answers. The economic benefits of releasing the technology are clear: higher profits for US companies, preservation of market share, and promotion of global AI development. However, the security risks are equally real: potential military applications, technology transfer, and the erosion of strategic advantages. The Trump administration must perform a complex calculation here, balancing short-term economic interests with long-term security policy objectives.

The historical significance of this decision will only become fully apparent in the coming years. If the chips are released and no negative security policy consequences arise, it could be seen as a milestone for a new form of technology diplomacy that prioritizes pragmatic cooperation over ideological confrontation. However, if the chips are misused for military purposes or if access strengthens Chinese competition, it could be viewed as a strategic error that permanently weakens US security. In any case, the decision will shape the debate on the role of technology in foreign policy, the balance between security and economic growth, and the future of global innovation.

The H200 approval is ultimately a test of the US's ability to navigate an increasingly multipolar technological world where economic interdependence and national security can no longer be treated as separate spheres. It necessitates a redefinition of what technological leadership means—not just the ability to design the most advanced chips, but also the skill to manage their global proliferation to achieve both economic and security objectives. The decision will reveal whether the US is prepared to embrace this new complexity and develop a nuanced strategy, or whether it clings to outdated, confrontational models that are becoming less and less effective in a networked world.

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