This article was originally published by The Epoch Times: Senators Say Nvidia’s Shanghai Expansion Is a Serious National Security Risk
Sens. Jim Banks (R-Ind.) and Elizabeth Warren (D-Mass.) are seeking answers from Nvidia about the AI chip company’s planned facility expansion in China.
In a May 28 letter, the senators demanded plans for the center, including timelines, salaries, the type of work it will house, and whether Nvidia will receive benefits or support from the Chinese regime or local authorities in this project.
Pointing to reports that claimed Nvidia was looking to develop local talent at the Shanghai facility and meet the demands of local customers in a way that satisfied U.S. export controls, the senators criticized the company as “reckless and short-sighted.”
Nvidia’s plans to develop a research and development facility in China were reported earlier this month, and the company responded in statements to the media that it would not be redesigning its chips in China or sending graphics processing unit designs to China.
Regarding the letter, an Nvidia spokesperson told The Epoch Times on May 29 that “NVIDIA is simply leasing a new space for existing employees, who need the room in the post-COVID return to work.”
“The scope of work will remain unchanged,” the spokesperson said.
Talent
One of the lawmakers’ concerns is intellectual property theft, and they asked what safeguards Nvidia would put in place.
Companies operating in China, whether they are Chinese or foreign companies, are subject to laws that authorize the Chinese Communist Party (CCP) to seize information and property. The senators say Nvidia’s presence in China means it is exposed to “continuous pressure” to comply with demands such as forced technology transfers and state-backed espionage.
The lawmakers say this access would then bolster a foreign adversary.
“Microsoft and Intel’s presence in the PRC [People’s Republic of China] helped seed a generation of Chinese startups that supported the CCP’s technology goals, NVIDIA now risks doing the same for AI technology,” the letter reads.
Nvidia’s website lists 83 job postings for positions based in China, compared to 572 in the United States.
“It is troubling that American firms are helping the PRC build cutting-edge semiconductor capacity, which will aid the country’s defense-industrial complex and techno-authoritarian capacity,” the letter reads.
The senators say the plant will erode lawmakers’ trust in Nvidia, which they have viewed “as a critical player in maintaining technological leadership against strategic adversaries.
“Please explain why NVIDIA would choose to enrich an authoritarian country’s innovation ecosystem by establishing a research center in the PRC rather than conducting this research at facilities located in the United States or allied nations, where NVIDIA could employ Americans or allies’ citizens,” the letter reads.
Export Controls
Nvidia CEO Jensen Huang is a vocal critic of U.S. export controls on semiconductor technology to China.
Nvidia is one of the several semiconductor companies that develop products specifically for the Chinese market to satisfy the specific limits the United States puts on these technologies.
The United States began restricting the sales of these technologies to China in 2022, requiring companies to obtain licenses to export to some companies and blacklisting others altogether.
Huang said the controls have been a “failure,” telling investors on a May 28 earnings call that all they have done is keep American companies out of a $50 billion market where rivals are developing their own AI stack.
“The AI race is not just about chips; it’s about which stack the world runs on as that stack grows to include 6G and quantum, U.S. leadership is at stake,” he said.
Huang said the export controls had been based on the assumption that China could not make its own AI chips, which is “clearly wrong.”
The senators criticized Nvidia’s continued business in the Chinese market, saying the company “risks violating the spirit, if not the written word, of U.S. export control regulations.”
“What does NVIDIA envision as the outcomes of this work? Does NVIDIA seek to substantially increase the AI capabilities of chips while technically staying below export control thresholds? If so, provide details on the magnitude of performance improvement NVIDIA is seeking,” the lawmakers wrote.
Trump Administration
The Trump administration has continued the Biden-era semiconductor export controls, announcing in April that an AI chip Nvidia developed specifically to sell to China while satisfying U.S. export controls would now also be restricted. Lawmakers on both sides of the political aisle had pushed for export controls on this chip as well.
Reports of Nvidia developing a new chip for China to satisfy the latest restrictions came soon after the export control was announced. During the May 28 earnings call, Huang said, “We don’t have anything at the moment, but we’re looking at it, we’re considering it.”
Huang praised President Donald Trump for his approach to AI diffusion despite criticizing the continued export controls, pointing to how the president opened the way for Middle Eastern states to invest in American AI earlier this month.
“The president has a plan. He has a vision, and I trust him,” Huang said.
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