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UPDATE: During a Monday press conference about the federal government seizing control of Washington, DC, President Trump also fielded questions about Nvidia. He confirmed that the US "negotiated a little deal" with Nvidia, in part because the H20 chip is "obsolete," so he doesn't have a problem sending it to China. (Nvidia might disagree with that characterization.)
Nvidia CEO Jensen Huang is "selling, essentially, old chips," Trump said. Huawei "has a similar chip...that does the same thing," he added, a reference to the 910C AI chip, suggesting the US doesn't want to give Huawei the upper hand. The H20 dates back to 2023.
For now, the US will not allow Nvidia to sell its "super duper advanced" Blackwell AI chips in China, Trump says. "I wouldn't make a deal with that. Although it's possible I'd make a deal [for] a somewhat enhanced—in a negative way—Blackwell. In other words, take 30 to 50% off of it" in terms of power.
Original Story:
Nvidia and AMD will soon pay the US government 15% of revenue from their AI chip sales to China. The unprecedented deal will allow the two companies to sell their AI-powered chips in China for the first time since April.
The financial arrangement is a condition for US export licenses to be reinstated for the Chinese market. The US banned sales earlier this year due to security concerns.
"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 told BBC News.
The Financial Times and The New York Times first reported the news.
Nvidia didn’t confirm or deny the specifics of the deal, and AMD has yet to publicly confirm, nor has the White House. The newspapers' sources say the US government is currently undecided about where to spend the extra money.
The H20 chip was originally produced by Nvidia after the US imposed export restrictions on the Chinese market in 2023, during the Biden administration. The chip is less powerful than the company's most advanced tech and was approved for sale in China at the time.
Earlier this year, the Trump administration restricted the sale of the H20 chip and AMD's rival, called the MI308. In July, the US government said it would reinstate sales for Nvidia. However, the Trump administration didn't immediately authorize the necessary export licenses.
Nvidia CEO Jensen Huang reportedly met with President Trump last week. Part of that conversation appears to have been negotiating the agreement to share 15% of revenue with the US government. The US government then allowed export sales for H20 starting Friday, Aug. 8.
Security pros have concerns about the lower-power H20. "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," a group of 20 security specialists wrote to Commerce Secretary Howard Lutnick last month.
“By supplying China with these chips, we are fueling the very infrastructure that will be used to modernize and expand the Chinese military," they added. "The line between optimizing an online marketplace and optimizing military logistics does not exist in the Chinese system—and we should not pretend otherwise."
In response, Nvidia said: "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. On social media, however, experts argue that the deal is unconstitutional.
"In addition to the policy problems with just charging Nvidia and AMD a 15% share of revenues to sell advanced chips in China, the US Constitution flatly forbids export taxes," says Peter Harrell, a nonresident fellow at the Carnegie Endowment for International Peace.
"The US Constitution expressly forbids export taxes, but I guess this 'payment' isn't a tax but a payout," tweeted Douglas Irwin, a John French Professor of Economics at Dartmouth College.