That’s ok. You can keep them. Thanks anyway, though.

No sooner had Jensen Huang secured export licenses for the less-advanced AI chips Nvidia designed specifically to comply with restrictions on sales of cutting-edge technology to China than Xi Jinping told local companies not to use the processors.

Wait. I should rephrase. Beijing discouraged Chinese companies from using Huang’s H20. Typically, guidance from the Party’s tantamount to a decree. Would you want to be the firm which does something Xi “urged” against? That’s a rhetorical question. On this issue, though, the distinction between discouraging the use of H20s and banning them isn’t without a difference.

The Chinese will figure this out (“this” being the procurement of advanced AI processors) eventually, but in the meantime they want and need US technology. Xi obviously knows that, and while he’s not enamored with the idea of China wanting, let alone needing, something it can’t produce domestically, it is what it is for now.

So, if you’re a Chinese company and you want to use H20s you can, but not for the purposes of government applications. As Bloomberg put it, citing people familiar with Beijing’s guidance, the exhortation was “particularly strong against the use of H20s for any government or national security-related work.” That applies both to private companies and SOEs.

The figure shows shares of Chinese domestic AI chip designer Cambricon Tech. They were limit-up Tuesday.

Recall that Beijing’s internet regulator quizzed Nvidia recently on what Chinese officials suggested were “backdoors” in the chips which could allegedly be switched off from abroad or geolocated. It’s not clear whether there was any merit to the informal accusations, but the Trump administration’s entertaining the idea of equipping chips with technology allowing for their location to be monitored.

Following Nvidia’s run-in with Chinese regulators, Xi’s propaganda machine spun into action. A CCTV-linked WeChat account claimed Huang’s H20s were a security threat and called the chips “not technologically advanced.” On that latter bit, at least, Trump and Xi agree. The White House this week called the technology “obsolete.”

Although it’s not entirely clear what Beijing thinks about Nvidia’s pay-to-play deal with Trump wherein the company’s effectively paying for export licenses, Xi’s aware that every H20 sale hands the US government money. That’s probably a price he’s willing to pay, though, if it means the most important company in the world continues to lobby Trump for the easing of export controls.

In a new piece called “Nvidia CEO Buys His Way Out of the Trade Battle,” The Wall Street Journal said Huang’s pitch to Trump revolved around the idea that “restrictions on US chip sales to China would backfire by pushing Chinese technology champions to achieve self-reliance.” Better, Huang told The White House, to “keep China hooked on American tech.” On top of acquiescing to Trump’s demands for a share of H20 revenue, Huang offered to invest $500 billion in the US “as a sweetener.”

On Monday, while regaling reporters with the tale of D.C.’s devastation at the hands of “bloodthirsty criminals,” Trump suggested he might let Nvidia sell China Blackwell chips, albeit with modifications to make them less capable. “It’s possible I’d make a deal,” he said, adding that such an arrangement would require Huang to develop a version of the Blackwell that’s “somewhat enhanced in a negative way.” He elaborated, Trump ‘splaining: “In other words, take 30% to 50% off of it.”

In their account, the Journal appeared to suggest that Trump’s announcement, with Tim Cook last week, that The White House will exempt tech companies who invest in the US from triple-digit semiconductor levies was prompted just hours earlier by Huang who “charmed Trump, drawing the president a diagram showing how tariffs would be counterproductive and signed it.”