Jan 29 (Reuters) -

U.S. President Donald Trump's administration is considering

tightening restrictions on artificial intelligence leader

Nvidia's ( NVDA ) sales of its H20 chips designed for the China

market, three people familiar with the matter said.

Conversations to restrict shipments of those chips to China

are in very early stages among Trump officials, the people said,

adding the idea has been under consideration since Democratic

former President Joe Biden's administration. H20 chips can be

used to run AI software and were designed to comply with

existing U.S. curbs on shipments to China, spearheaded by Biden.

The White House did not respond to requests for comment.

Nvidia ( NVDA ) said in a statement it is "ready to work with the

administration as it pursues its own approach to AI."

Nvidia ( NVDA ) shares, which were already down for the day, added

slightly to losses after the news, first reported by Bloomberg.

Worries are mounting that China is catching up to the

U.S. in AI development after China's DeepSeek

last week launched a free assistant

it says uses less data at a fraction of the cost of

incumbent players' models, possibly marking a turning point in

the level of investment needed for AI.

"This topic has been discussed for more than half a

year," among high-level officials, said Lennart Heim, a

researcher at RAND, saying it was a recommendation made during

the Biden administration as well. "DeepSeek highlights it," he

added.

Biden, who left office this month, put in place a raft

of restrictions barring exports of AI chips to China and capping

their shipment to a host of other countries. However, some AI

chips, including Nvidia's ( NVDA ) H20 can still be lawfully shipped to

China.