US President Donald Trump has announced that he will allow AI chip giant Nvidia to sell its advanced H200 chips to "approved customers" in China.

"We will protect National Security, create American Jobs, and keep America's lead in AI," Trump said on social media on Monday.

The decision will apply to other US chip companies like AMD and comes after extensive lobbying by Nvidia boss Jensen Huang, who visited Washington last week to drum up support.

Nvidia - both the world's leading chip firm and most valuable company - has found itself at the centre of a geopolitical tug-of-war between the US and China in recent months, and had been banned from selling its most advanced chips to Beijing.

Trump reversed the chip-selling ban in July, but demanded that Nvidia pay 15% of its Chinese revenues to the US government.

Beijing then reportedly ordered its tech companies to stop buying Nvidia chips manufactured for use in the Chinese market.

"We applaud President Trump's decision to allow America's chip industry to compete to support high paying jobs and manufacturing in America," Nvidia said in a statement provided to BBC News.

Nvidia's H200 is a generation behind its Blackwell chip, which is considered to be the world's most advanced AI semiconductor.

Mr Huang told the BBC in September that the US needed "to make sure that people can access this technology from all over the world, including China."

He has also repeatedly warned that China, which has cultivated a chip production ecosystem of its own, was close behind the US in chip development.

Nvidia hailed Trump's announcement on Monday.

"Offering H200 to approved commercial customers, vetted by the Department of Commerce, strikes a thoughtful balance that is great for America," Nvidia said in its statement.

The companies shares rose slightly on the news.

Trump said "$25% [sic] will be paid to the United States of America" in his post.

The BBC has reached out to the White House for clarification on the arrangement, which will likely face opposition from national security hawks in Congress.

The sale of H200 chips to some Chinese customers "buys time" for the US to negotiate a deal with Beijing over rare earths and prevent major disruptions to global supply chains, Alex Capri from the National University of Singapore said.

China holds a near-monopoly on the processing of rare earth minerals, which are essential for the production of most electronics.

Although access to H200 chips is likely to benefit China's technology sector, Beijing is still expected to work towards reducing dependence on the US, Mr Capri said.

Beijing had previously directed local tech firms to reject Nvidia's older H20 chips and encouraged them to buy domestically produced semiconductors, he noted.

Researchers at Georgetown University's Center for Security and Emerging Technology (CSET) said China's People's Liberation Army is using advanced chips designed by US companies to develop AI-enabled military capabilities.

"By making it easier for the Chinese to access these high-quality AI chips, you enable China to more easily use and deploy AI systems for military applications," said Cole McFaul, senior research analyst at CSET. "They want to harness advanced chips for battlefield advantage."