Nvidia and AMD will soon begin paying 15% of revenue made from its AI chip sales to China directly to the US government. The unprecedented deal will see the two companies allowed to once again sell their AI-powered chips in China for the first time since April.
The financial arrangement is a condition for export licenses to be reinstated for the Chinese market after the US government banned sales earlier this year due to security concerns.
Details of the deal come from people familiar with the matter, speaking to the Financial Times and The New York Times. Nvidia told BBC News, “We follow rules the US government sets for our participation in worldwide markets. While we haven’t shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide.”
Nvidia didn’t confirm or deny the specifics of the deal, and AMD has yet to publicly confirm its involvement. The White House has yet to comment on either deal. The same sources familiar with the matter said the US government is currently undecided on where to spend the extra money.
The H20 chip was originally produced by Nvidia after the US imposed export restrictions to the Chinese market back in 2023, during the Biden administration. The chip is less powerful than the company’s most advanced tech, and it was approved for sale in China at the time.
Earlier this year, Trump’s government then banned the sale of the N20 chip and AMD’s rival called the MI308. In July, the US government then said it would be reinstating sales for Nvidia. However, the Trump administration didn’t immediately reinstate the export licenses needed to allow for those sales.
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Nvidia’s CEO, Jensen Huang, reportedly met with Present Trump last week. Part of that conversation appears to be a negotiation of the agreement of sharing 15% of revenue to the US government. The US government then allowed for export sales for the H20 from Friday, August 8.
A group of security specialists sent a letter back in July after the government confirmed it would be reopening sales of the chips to China. The letter was issued by 20 security and economic experts, including former security officials from the Trump administration.
It said, “Chips optimized for AI inference will not simply power consumer products or factory logistics; they will enable autonomous weapons systems, intelligence surveillance platforms, and rapid advances in battlefield decision-making.”
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“By supplying China with these chips, we are fueling the very infrastructure that will be used to modernize and expand the Chinese military. The line between optimizing an online marketplace and optimizing military logistics does not exist in the Chinese system—and we should not pretend otherwise.”
Nvidia responded to the letter saying, “The H20 helps America win the support of developers worldwide, promoting America’s economic and national security. It does not enhance anyone’s military capabilities, and the US government has full visibility and authority over every H20 transaction.”
It’s unclear if any other companies are eyeing similar deals to AMD and Nvidia.
About James Peckham
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