US President Donald Trump has cleared the way for tech giant Nvidia to sell its advanced H200 chip to China, in a significant easing of Washington’s export controls targeting Chinese tech.

Trump said on Monday that he had informed Chinese President Xi Jinping of the decision to allow the export of the chip under an arrangement that will see 25 percent of sales paid to the US government.

Trump said exports would be allowed to “approved customers” under conditions that protect national security, and that his administration would take the “same approach” in relation to other chipmakers, such as AMD and Intel.

“This policy will support American Jobs, strengthen U.S. Manufacturing, and benefit American Taxpayers,” Trump said on Truth Social.

Nvidia, which is based in Santa Clara, California, said the move struck a “thoughtful balance” and would “support high paying jobs and manufacturing in America”.

Nvidia shares jumped more than 2 percent in after-hours trading on the news.

Trump’s announcement marks a major departure from the policy of former President Joe Biden’s administration, which confined Nvidia and other chipmakers to exporting downgraded versions of their products specifically designed for the Chinese market.

In his Truth Social post, Trump slammed the Biden administration’s approach, claiming it had led to US tech companies spending billions of dollars on downgraded products that “nobody wanted”.

The H200, launched in 2023, is Nvidia’s most powerful chip outside of the latest-generation Blackwell series, which Trump confirmed would continue to be restricted for the Chinese market.

While not Nvidia’s most advanced chip, the H200 is almost six times as powerful as the previous generation H20 chip, according to the Washington-based Institute for Progress, a non-partisan think tank.

Under an agreement with the Trump administration announced in August, Nvidia agreed to pay the US government 15 percent of revenues from its sales of the H20, which was designed to comply with restrictions imposed on the Chinese market.

Tilly Zhang, an expert on Chinese tech at Gavekal Dragonomics, said Trump’s decision reflected “market realities” as well as intense lobbying by Nvidia CEO Jensen Huang.

“The priority is moving away from purely blocking or slowing China’s tech progress, more towards competing for market share and securing the commercial benefits of selling their own tech solutions,” Zhang told Al Jazeera.

As blocking China’s tech advancement becomes increasingly unrealistic, “gaining more market share and revenue is turning into a higher priority”, Zhang said.

“That’s what this US move signals to me.”

Zhang said the race between China and the US to dominate artificial intelligence had shifted from export controls towards market competition.

“That might push chipmakers on both sides towards faster innovation, and bring more market dynamics,” she said.

Trump’s announcement drew a swift rebuke from Democratic lawmakers.

US Senator Elizabeth Warren, who represents Massachusetts, accused the Trump administration of “selling out US security”.

“Trump is letting NVIDIA export cutting-edge AI chips that his own DOJ revealed are being illegally smuggled into China,” Warren said on X, referring to multiple probes into illegal chip shipments carried out by the US Department of Justice.

“His own DOJ called these chips ‘building blocks of AI superiority’.”

Chris McGuire, a senior fellow at the Council on Foreign Relations, said Trump’s move was a blow to US efforts to stay ahead of China in the race to dominate AI.

“Loosening export controls on AI chips will allow Chinese AI firms to close the gap with frontier US AI models, and will allow Chinese cloud computing providers to build ‘good enough’ data centres around the world,” McGuire, who worked on tech policy in Biden’s White House, told Al Jazeera.

“This risks undermining the administration’s efforts to ensure the US AI stack dominates globally.”