Nvidia and AMD have agreed to pay 15% of the revenue they earn from advanced chip sales to China to the US government. According to a US official, this unusual move is expected to upset American companies.
The Trump administration halted exports of Nvidia’s H20 AI chips to China in April. However, last month, Washington eased the ban and said the company would soon be allowed to begin deliveries.
The US Department of Commerce began issuing licenses for the sale of these chips last week. The agreement is noteworthy as a rare instance of intervention in US history. The Trump administration, while pressuring companies to manufacture more in the US, even publicly demanded the resignation of the Intel CEO. Experts are approaching the decision cautiously. Geoff Gertz of the Washington-based independent think tank CNAS asks, “Either the sale of these chips poses a national security risk and should not be done at all, or if there is no such risk, why is an additional tax being applied?” He pointed out the contradiction by saying:Nvidia earned $17 billion from China, accounting for 13% of its total sales from that country. AMD’s China revenue, on the other hand, was $6.2 billion, representing 24% of its total turnover.
It was reported that the agreement was accepted as a condition for export licenses granted to the companies. However, the Trump administration does not yet have a clear plan on how this money will be used.
US Commerce Secretary Howard Lutnick stated that they consider the sale of H2O chips as part of the rare earth element negotiations with China. According to Lutnick, these chips are Nvidia’s “fourth best product” and keeping China within the American technology stack is strategically in the U.S.’s interest.
