China Seeks U.S. Easing of Chip Export Controls to Unlock Trade Deal

U.S.–China trade talks are gaining momentum as Beijing presses for a relaxation of restrictions on high-bandwidth memory (HBM) chip exports. The request has emerged as a central bargaining point in negotiations that could reshape technology supply chains and capital markets.

Strategic Push for HBM Chip Relaxation

China views access to HBM chips as a strategic priority. These advanced memory components, critical for AI processing, are often paired with top-tier GPUs and are vital for next-generation computing. Current U.S. rules limit the sale of high-end models, slowing China’s ability to scale its AI industry.

Chinese firms have explored domestic alternatives, but these lag behind global standards. Any easing would significantly narrow the technology gap with U.S. and South Korean rivals.

Security Versus Commerce

Washington has used chip restrictions to curb China’s military and surveillance capabilities. The policy has broad bipartisan support, rooted in concerns over advanced AI’s potential dual-use applications.

Yet China remains one of the largest markets for U.S. chipmakers. Workarounds have kept some trade alive, but they are less profitable. Even partial relief could mean billions in regained sales.

Revenue-Sharing and Rare Earths Linkage

Negotiations include a proposal for U.S. chipmakers to share 15% of China-related AI chip revenues with the U.S. government in exchange for export licenses. This would maintain oversight while restoring market access.

Talks also link chip policy to Chinese exports of rare-earth materials and magnets—critical to U.S. tech and defense manufacturing—adding another strategic layer to the deal.

Geopolitical and Market Stakes

Easing HBM controls could accelerate China’s AI capabilities while securing revenue and mineral supply for the U.S. Semiconductor stocks have already shown heightened volatility, and rare-earth producers are drawing more investor interest.

A breakthrough could lift valuations for chipmakers with heavy China exposure, though it would also deepen the competitive race in advanced technologies.

Tips for Traders

• Track negotiation updates: Even partial easing could move semiconductor prices sharply.

• Watch rare-earth market trends: Supply agreements may shift commodity pricing.

• Assess policy-driven earnings: The 15% revenue-sharing could affect margins.

• Balance sector exposure: Tech, defense, and materials could all react to the deal.

• Use volatility tactically: Trade tensions can create short-term opportunities.

• Consider currency impacts: Shifts in U.S.–China trade flows could influence FX markets.