Nvidia and AMD, Two major chip companies, have agreed to give the US government 15% of their earnings from selling chips in China. This deal was made to get special permissions, called export licenses, from the Trump administration to sell their chips in China.
Details of the Deal
- Nvidia: Will share 15% of the money earned from selling its H20 chip in China.
- AMD: Will share 15% of the money earned from selling its MI308 chip in China.
- The US government started giving out these licenses last week after Nvidia’s CEO, Jensen Huang, met with President Donald Trump.
- The money collected from this deal hasn’t been assigned a specific use yet by the Trump administration.
Why This Matters
This kind of deal is unusual. No US company has ever had to pay a share of their sales to get export licenses before. The Trump administration has a history of asking companies to make deals like this, such as investing in the US, to avoid taxes or other restrictions.
Background on the H20 Chip
The H20 chip was designed by Nvidia specifically for China after the US, under President Joe Biden, placed strict rules on selling advanced chips used for artificial intelligence (AI). Earlier this year, the Trump administration planned to ban H20 chip sales to China but changed its mind after Jensen Huang met with Trump in June. Licenses were issued shortly after their meeting.
Concerns and Criticism
- Some US security experts worry that selling the H20 chip to China could help the Chinese military and weaken US leadership in AI technology.
- Liza Tobin, a China expert, said this deal makes it look like the US is turning export licenses into a way to make money, which could benefit China.
- Some officials in the US Commerce Department, which oversees export licenses, are also concerned about this decision.
- A group of security experts, including Matt Pottinger, wrote a letter to the Commerce Department, warning that the H20 chip could boost China’s AI capabilities and be used by their military. Nvidia disagrees, saying the chip cannot be used for military purposes.
Nvidia and AMD’s Response
- Nvidia: Did not deny the deal and said it follows US government rules for selling products globally. They also said they hope US export rules will allow American companies to compete in China and maintain leadership in AI technology.
- AMD: Confirmed that their license applications were approved and said they follow all US export laws.
What’s Next?
This deal comes as the US and China are holding trade talks. There are concerns that the Trump administration might ease restrictions on chip exports to avoid upsetting China. Meanwhile, China is pushing to relax rules on high-bandwidth memory (HBM) chips, which are important for making advanced AI chips.