Nvidia, AMD to pay U.S. government 15% of China AI chip sales in an unusual export agreement

Nvidia and AMD, two prominent U.S. chipmakers, have agreed to pay the U.S. government 15% of revenue generated from sales of their AI chips in China. This unusual arrangement was reached as a condition for granting export licenses for China, as reported by the Financial Times. Typically, corporations do not pay the federal government a share of revenue from export sales, and export licenses do not carry fees.

President Trump described the agreement with Nvidia as a beneficial deal for the nation during a press conference. He mentioned meeting with Nvidia CEO Jensen Huang to discuss the terms of the export license, where he initially requested 20% but settled on 15% for the country’s benefit. The revenue-sharing plan follows the White House’s announcement in April to restrict sales of Nvidia’s H20 chips and AMD’s MI308 chips to China. However, Nvidia recently received approval from the Trump administration to sell its H20 chips to China.

The H20 chip, designed for artificial intelligence applications, was developed by Nvidia specifically for the Chinese market, while AMD’s MI308 chips also cater to AI needs. The specifics of how the Trump administration will utilize the revenue generated from this chip sales agreement remain unclear.

Nvidia declined to provide details on the deal but emphasized compliance with U.S. government regulations for global market participation. AMD did not immediately comment on the agreement. Both companies experienced a slight rise in stocks following the news. Restrictions on advanced chip sales to China are seen as crucial for maintaining U.S. competitiveness and national security in the AI sector.

The Commerce Department has updated export controls to address concerns about China’s efforts to obtain semiconductor manufacturing equipment for advanced weapon systems. These controls aim to safeguard U.S. interests amid the ongoing competition for AI dominance between the two countries.

In conclusion, the agreement between Nvidia, AMD, and the U.S. government highlights the complex dynamics of technology exports and national security in the AI industry. As the industry continues to evolve, such partnerships and regulations will play a vital role in shaping the future of AI development and global competitiveness.