Nvidia's H20 Chip Caught in US-China AI Trade Tensions

China tells Alibaba, ByteDance to justify purchases of Nvidia AI chips

Beijing is demanding tech companies including Alibaba and ByteDance justify their orders of Nvidia's H20 artificial intelligence chips, complicating the US chipmaker's business in China after striking an export arrangement with the Trump administration. The tech companies have been asked by regulators such as the Ministry of Industry and Information Technology (MIIT) to explain why they need to order Nvidia's H20 chips instead of using domestic alternatives, said three people familiar with the situation. Some tech companies, who were the main buyers of Nvidia's H20 chips before their sale in China was restricted, were planning to downsize their orders as a result of the questions from regulators, said two of the people. "It's not banned but has kind of become a politically incorrect thing to do," said one Chinese data centre operator about purchasing Nvidia's H20 chips. Alibaba, ByteDance and MIIT did not immediately respond to a request for comment. Chinese regulators have expressed growing disapproval of companies using Nvidia's chips for any government or security related projects. Bloomberg reported on Tuesday that Chinese authorities had sent notices to a range of companies discouraging the use of the H20 chips, particularly for government-related work. Beijing is also working to promote domestic alternatives to Nvidia. Chinese chipmakers led by Huawei and Cambricon have been gaining market share after Nvidia's H20 sales were restricted. Nvidia, which recently agreed to pay the US government 15 percent of its revenues from chip sales in China in order to restart H20 sales to the country, is at the centre of a geopolitical battle between Beijing and Washington. The H20 revenue deal was criticised by US security experts who said the chips would help the Chinese military and undermine US strength in artificial intelligence. Beijing has expressed concerns about security issues associated with Nvidia's products, such as potential location tracking and remote shutdown capabilities. The US chipmaker denied having those features. Trump said on Monday that he might allow Nvidia to sell a more advanced artificial intelligence chip in China based on the chipmaker's latest and most advanced Blackwell platform. The performance of H20 chips sold to China is restricted compared with those more advanced processors sold to customers in the US. Bernstein analysts said in a recent report that it expected Nvidia's China chip market share to drop to 55 percent this year from 66 percent in 2024.

Why Trump Flip-Flopped on Nvidia Selling H20 Chips to China

The tech industry is reeling from President Trump's surprising new deal with Nvidia. Earlier this week, Trump said he would allow the company to continue selling its H20 chips to China in exchange for a 15 percent share of the revenues. "The H20 is obsolete. You know, it's one of those things, but it still has a market," Trump said at a press conference on Monday. "So we negotiated a little deal." The unusual and legally dubious arrangement is a striking reversal for the Trump administration, which banned all H20 sales to China earlier this year. The president reportedly changed his mind about the issue after meeting with Nvidia CEO Jensen Huang, who has argued that allowing Chinese companies to buy H20s doesn't pose a risk to US national security. On one hand, this is a simple story about a president who appears to have been influenced by a powerful executive lobbying in his company's interest. But beneath the surface, there's a much more interesting and complicated saga about how we got here. Nvidia introduced the H20 last year after the US government banned the company from selling a more powerful chip, the H800, to China. The move was part of an ambitious project orchestrated by Biden administration officials who believed the United States needed to prevent China from developing advanced artificial intelligence first. For the past few months, I've been working closely with Graham Webster, a researcher at Stanford University who sought to understand how and why the Biden team decided the US needed to curb China's access to advanced semiconductors in the first place. Today, WIRED is publishing Graham's definitive account of what really happened behind the scenes, based on interviews with more than 10 former US officials and policy experts, some of whom spoke on the condition of anonymity. "I did this piece because the official legal justification for the controls, military and human rights, was obviously never the whole story," Graham told me. "Clearly AI was in the mix, and I wanted to understand why in some depth." Graham writes that several key officials in Biden's White House and Commerce Department "believed AI was approaching an inflection point -- or several -- that could give a nation major military and economic advantages. Some believed a self-improving system or so-called artificial general intelligence could be just over the technical horizon. The risk that China could reach these thresholds first was too great to ignore." So the Biden team decided to take action. In the fall of 2022, they unveiled broad export controls aimed at preventing China from accessing the most advanced chips required for training powerful AI systems, as well as specialized equipment Beijing needed to modernize its own domestic chipmaking industry. The move was the start of a multi-year project that "would reshape relations between the world's two largest powers and alter the course of what may be one of the most consequential technologies in generations," Graham writes. What struck me about Graham's story is just how many people involved in Biden's export control policies moved on to other influential positions in the world of AI, computing, and national security. Jason Matheny, who led the White House's policy on technology and national security, is now the president and CEO of RAND, a prominent think tank that often serves government clients. Tarun Chhabra, who worked on the National Security Council, now leads national security policy at Anthropic.

Nvidia responds to claim China is urging local companies to avoid Nvidia H20 -- report claims authorities have sent notices discouraging use, especially for government-related purposes

It follows state media-raised concerns about security and safety Just hours after President Trump confirmed a new deal that will see Nvidia pay 15% of sales revenue to the government in exchange for H20 export licenses, a new Bloomberg report claims that China's government has been urging local companies to avoid using the chips for weeks. Nvidia has hit back and tells us its H20 chip is not for use in military applications or government infrastructure. Over the weekend, reports claimed that the White House had struck a deal with both Nvidia and AMD that would see the companies share 15% of related revenue in China in exchange for export licenses of previously restricted chips, the H20 and MI308, respectively. Since then, President Trump has confirmed the deal and even hinted that he may permit Nvidia to ship more potent Blackwell AI processors, providing they are nerfed in some regard. Despite the perceived boon to Nvidia in securing H20 licenses, Bloomberg says that China "has urged local companies to avoid using Nvidia Corp.'s H20 processors," especially for government-related purposes, in a potential blow to the company. According to the report, Chinese authorities have sent notices to firms over the past few weeks "discouraging use of the less-advanced semiconductors." The report comes from "people familiar with the matter," and cannot be verified at this stage; however, Bloomberg claims the information comes from interviews with "more than a half-dozen people." The report claims that particularly strong guidance was issued around the use of the H20 chip for government and national security-related work by both state enterprises and private companies. It also briefly mentions that AMD AI accelerators, presumably the aforementioned MI308, are also thought to have been included in the push. According to the report, some letters from the state to companies included a series of questions asking why entities would buy Nvidia H20 chips over local alternatives, "whether that's a necessary choice given domestic options, and whether they've found any security issues in the Nvidia hardware." The concerns reflect recent reports that Chinese state media is pushing the line that H20 GPUs are unsafe and outdated. One state-linked social media account wrote on WeChat, "When a type of chip is neither environmentally friendly, nor advanced, nor safe, as consumers, we certainly have the option not to buy it." Bloomberg claims that the most stringent guidance relates only to sensitive applications, in the same way that Tesla vehicles and iPhones are restricted in certain places in the country. However, at least one source reportedly told the publication that the guidance could be extended. In a statement, Nvidia told Tom's Hardware: "As both governments recognize, the H20 is not a military product or for government infrastructure. China has ample supply of domestic chips to meet its needs. It won't and never has relied on Americans chips for government operations, just like the U.S. government would not rely on chips from China. Banning the sale of H20 in China would only harm U.S. economic and technology leadership with zero national security benefit." The statement, while addressing China's concerns, seems strange, given that China's reported move against H20 would clearly be motivated, at least in part, by a desire to erode U.S. economic and technology leadership. As mentioned, the state media concerns were fairly nebulous, simply touting the H20 as unsafe and bad for the environment. More specifically, Bloomberg claims that China's concerns center around location-tracking and remote shutdown of chips, coupled with a broader concern about shifting reliance away from Western offerings. According to Bloomberg, Chinese officials "are worried that Nvidia chips could have location-tracking and remote shutdown capabilities," something Nvidia strenuously denies. In a recent article, Nvidia denounced claims that any of its hardware contains backdoors or kill switches, and vehemently opposed their use in principle. As the report notes, Washington has floated the idea of using georestrictions, including software and hardware-based solutions, to combat chip smuggling. On the broader note of supply, Bloomberg notes "Beijing is intensely focused on developing its domestic chip capabilities," and cites officials urging Chinese companies to pick homegrown semiconductors. If China is indeed going on the offensive, urging local companies to steer clear of H20 chips, that could complicate the picture for Nvidia in the region somewhat. Despite initial indications that Nvidia was sitting on enough H20 chips to meet renewed demand -- CEO Jensen Huang stated the company would not restart production -- a report in late July claimed Nvidia was seeking an extra 300,000 units to meet demand.

White House confirms it's still figuring out the legality of revenue-sharing Nvidia and AMD deal for China GPU sales -- 'The legality of it, the mechanics of it, is still being ironed out'

President Trump wants a 15% cut on Nvidia's and AMD's export-controlled China sales -- but will the courts allow him? Just days after confirming that the White House has struck a revenue-sharing deal with AMD and Nvidia in exchange for AI chip export licenses, Washington seems to have confirmed that it hasn't quite worked out the mechanics of the legalities behind the measure. While the President and the two AI chip makers have seemingly agreed to this agreement in principle, its unprecedented nature has come under considerable scrutiny from the outside. Now, CNBC reports that even the White House is still trying to work out its details, including its legality. Legal experts have pointed out that Article I, Section 9, of the U.S. Constitution says, "No Tax or Duty shall be laid on Articles exported from any State." This is also known as the Export Clause, and it has previously been tested in the U.S. Supreme Court, when the federal government attempted to impose a Harbor Maintenance Tax based on the value of cargo passing through American ports -- including exports. In 1998, an exporter challenged the export tax, which was styled as a user fee set at 0.125% of the cargo's value, and the Supreme Court sided with it. Furthermore, the Export Controls Reform Act of 2018, which the Trump Administration uses to control the export of dual-use items, like advanced semiconductors, seemingly specifically prohibits charging for export licenses. According to 50 U.S.C. § 4815(c), "No fee may be charged in connection with the submission, processing, or consideration of any application for a license or other authorization or other request made in connection with any regulation in effect under the authority of this subchapter." Nevertheless, it seems that the White House is focused on getting this deal through, and maybe even expanding it to other companies. "Right now, it stands with these two companies; perhaps it could expand in the future to other companies," said White House spokesperson Karoline Leavitt. "The legality of it, the mechanics of it, is still being ironed out by the Department of Commerce, and I would defer you to them for any further details on how it will actually be implemented." The U.S. State Department does charge an annual license fee to arms manufacturers, but it's mandated under the Arms Export Control Act and detailed in the International Traffic in Arms Regulation. These fees are fixed and structured, though, and are not based on the value or sales of the exported items. Trump is apparently keen on getting this export control, as it gives him the best of both worlds -- making extra revenue for the government while allowing Nvidia and AMD to continue exporting AI chips. However, this will likely be challenged in the courts as soon as he implements it. Whether or not both companies contest this export tax remains to be seen, as they can simply pass on the cost to their Chinese customers who are willing to pay. Given that it is reported that Nvidia negotiated the deal with President Trump, the prospect seems unlikely. However, the shareholders of these companies might complain because this entails additional costs for these companies, reducing their revenue. More importantly, state attorneys general might challenge this, as it might be seen as executive overreach. Nevertheless, we will have to wait until the Department of Commerce comes out with the documents that cement these deals before we will know how the White House and its critics will treat these export taxes.

The tale of Nvidia's HGX H20: How an AI GPU became a political lightning rod

Nvidia's HGX H20 AI GPU represents a fraction of the company's revenue, but the number of its mentions in the business media far outpaces mentions of the company's much more powerful and lucrative H100 or B200 processors. In fact, this specific GPU model has gained a fair bit of notoriety over the last few months as it has become a lightning rod in the heated U.S.-China trade war. To a large degree, this happened because HGX H20 was one of only a few GPU models for AI workloads that the Biden administration allowed the company to ship to China without any export licenses. However, the current Trump administration has used the HGX H20 as a geopolitical tool, and has now turned it into a source of federal revenue. Meanwhile, China reportedly also wants to play the game, too, so it is probing whether Nvidia GPUs feature U.S.-mandated tracking features as well as backdoors, and has even asked China-based companies to halt H20 imports in the meantime, potentially hurting Nvidia's revenue. This new situation is developing while the Trump administration is considering letting Nvidia sell Blackwell-based AI processors to Chinese entities. With swirling reports spanning more than a year during the intensifying U.S.-China trade war, the HGX H20 has earned a rare spot of international notoriety. Here's how the situation has unfolded so far, and where it is potentially headed. Nvidia released its first cut-down versions of its flagship GPUs, the A800 and H800, for the Chinese market in 2022. This was when Joe Biden's administration restricted shipments of supercomputer-grade hardware to the People's Republic of China on national security grounds. As a result, the A800 and H800 had their NVLink bandwidth cut to 400 GB/s and 450 GB/s (respectively), and interconnect topology options were limited, which limited multi-GPU scaling and limited their efficiency for supercomputers that run communication-heavy workloads. Performance-wise, the A800 and H800 were not too far behind the power of their fully-featured brethren. By late 2023, it became clear that China-based entities had managed to overcome restrictions and use H800 for AI training without any significant problems, enjoying the performance and efficiency of Nvidia's Hopper architecture. This was years ahead of anything China-based developers had to offer. To that end, the Biden administration imposed the Export Administration Regulations (EAR) rule 3A090.a (covers processors designed or marketed for use in data centers) and 3A090.b (covers those not designed or marketed for data centers) that introduced Total Processing Power (TPP) and Performance Density (PD) restrictions on all compute hardware shipped to China. As a result, Nvidia had to cut down its GH100, AD102, and AD104 silicon to build its HGX H20, L20 PCIe, and L2 PCIe products that met both TPP and PD restrictions imposed by the U.S. government. Consequently, Nvidia's HGX H20 was 3.3 - 6.69 times slower than H100 in AI workloads and 34 - 67 times slower than H100 in HPC workloads that require FP64 precision. AMD followed suit with the Instinct MI308 processor. But while the HGX H20 is massively slower than its full-fat H100 counterpart, the unit is still quite competitive with AI processors designed in China (even though Huawei has rack-scale AI systems that beat Nvidia's flagship GB200 NVL72). Furthermore, since the majority of hyperscale cloud service providers (CSPs) in China rely on Nvidia's highly-efficient CUDA software stack, they have been eagerly buying billions of dollars' worth of HGX H20 processors for their workloads, as real-world performance of these chips was higher compared to domestic solutions, according to SemiAnalysis. As a result, Nvidia's AI GPUs have dominated not only the global AI hardware sector in general, but China's AI hardware sector in particular. This has turned these processors into geopolitical instruments. Earlier this year, the Biden administration introduced its policy called the AI Diffusion Rule, which proposed barring the export of advanced GPUs to China, Russia, and others, while slightly less restrictive rules were proposed for other countries (even though they would have significantly affected supply). The rule was set to come into effect on May 15. Although the Trump administration scrapped the AI Diffusion Rule, Nvidia's hardware and related export controls remained a key bargaining tool in U.S.-China trade negotiations. The AI Diffusion Rule would have divided the world into three licensing tiers. The first tier, made up of the U.S. and 18 close allies, would retain unrestricted access to advanced chips like Nvidia's H100. The second tier, covering over 100 nations (including close allies like the Baltic States, Israel, and Poland), would face a limit of roughly 50,000 H100-class GPUs over several years, unless they secure verified end user (VEU) approval, which would require direct negotiations with the U.S. government. However, buyers in these Tier 2 countries could still bring in up to 1,700 high-end AI processors annually without needing a license, and these would not count toward the quota. The third tier -- which included China, Russia, and Macau -- would be entirely prohibited from acquiring advanced processors, due to existing arms bans. Under this rule, AMD and Nvidia would lose the ability to sell the HGX H20 and Instinct MI308 GPUs to Chinese entities. Recently, Trump admitted that he had been unaware of Nvidia's existence until a conversation with an advisor revealed the company's dominant control over the AI training hardware market. As a result, when told that Nvidia effectively had a 100% market share, he initially proposed regulatory action to split up the company to make space for potential competitors. However, he was advised that even if the U.S. assembled top-tier talent and formed a company big enough to survive and compete, it would still take at least a decade to match Nvidia's capabilities, even assuming poor management on Nvidia's part. He also recognized that technological lead makes Nvidia a dominant force globally, which could be instrumental on the geopolitical scene. As a result, while the Trump administration annulled the AI Diffusion Rule and let U.S. companies ship their hardware to China, it could not resist from using export controls on multiple leading American companies -- including AMD, Nvidia as well as Electronic Design Automation (EDA) makers Cadence, Synopsys, and Siemens EDA -- as bargaining chips in Trump's government's negotiations with China. In mid-April, the U.S. administration banned sales of HGX H20 and Instinct MI308 to Chinese entities, and it followed suit in May, banning sales of EDA tools to Chinese clients. As a result of the export ban on its HGX H20 processor for AI, Nvidia had to write down $4.5 billion worth of inventory (consisting of both ready-to-ship silicon and commitments to production partner TSMC), whereas AMD wrote off $800 million. However, after China agreed to sign a trade deal with the U.S. and eased exports of some rare earth metals, the U.S. allowed EDA companies to work with China-based customers, and said it would grant export licenses for HGX H20 and Instinct MI308 processors. When China hardliners criticized the move to let Nvidia sell the remainder of the H20 stock to its clients in China, Commerce Secretary Howard Lutnick reportedly argued that the approved processors would be instrumental in tying Chinese AI developers to Nvidia's CUDA ecosystem. But, because the H20 is a cut-down version of Nvidia's former flagship AI GPU, it doesn't give Chinese entities the ability to develop artificial intelligence comparable to models built in America. The U.S. government's attempt to use leading-edge hardware -- including Nvidia's HGX H20 -- as elements in geopolitical negotiations were certainly noticed by the Chinese government, so in the recent weeks China's Cyberspace Administration (CAC) ordered major tech companies, including Alibaba, ByteDance, and Tencent, to pause new Nvidia H20 GPUs purchases while it investigates potential security risks, citing fears of U.S.-mandated tracking features and possible backdoors, which Nvidia rebuffed, in a statement given to Tom's Hardware, Nvidia said: "As both governments recognize, the H20 is not a military product or for government infrastructure. China has ample supply of domestic chips to meet its needs. It won't and never has relied on American chips for government operations, just like the U.S. government would not rely on chips from China. Banning the sale of H20 in China would only harm U.S. economic and technology leadership with zero national security benefit." Large AI and HPC data centers can be seen from space using IR sensors, and virtually all of the chips located there can theoretically be tracked down using their drivers, so the Chinese authorities are likely making this a political matter. "You can see data centers with IR sensors from space," says Jon Peddie, the President of Jon Peddie Research, in a statement to Tom's Hardware Premium. "GPUs and CPUs have had telemetry capabilities via the driver for a long time. Presumably, it is a bi-directional path, thereby leading to the Chinese speculation that Nvidia or the U.S. government could shut down the chips remotely. That would be suicide: who would ever buy an Nvidia or any American chip if you thought the supplier or government might shut it down?" Nvidia has denied that its hardware features any backdoors or kill switches, but halting shipments of H20 is a hit on Nvidia by the Chinese authorities. Which is a testament that AI -- both on hardware and software fronts -- is not only a strategically important technology, but it is also a crucial new sector of the global economy. "Cybersecurity is critically important to us. NVIDIA does not have 'backdoors' in our chips that would give anyone a remote way to access or control them," a statement by Nvidia sent to Tom's Hardware reads. As Nvidia earns tens of billions of dollars on its hardware for AI data centers, the U.S. government wanted its piece of Nvidia's success. As a result, just weeks after the U.S. government announced that it would grant export licenses for AMD's Instinct MI308 and Nvidia's HGX H20 processors bound to China, it turned out that the Trump administration had essentially imposed a sales tax on these export licenses and made companies share 15% of their China revenue with the U.S. government. "It is a sales tax, nothing strategic or technical," Peddie continues. "It represents double taxation, something Republicans used to get very upset about. This now opens the door to sales tax on export licenses for everything, which is counterintuitive, as the current administration aims to alter the balance of trade." Imposing export duties is illegal under the U.S. Constitution, but this did not stop President Donald Trump from proposing the deal, then having the Department of Commerce introduce a legal ground for it. Some of the China hardliners in the U.S. legislative branch claimed that even the HGX H20 shipments to China represent national security risks, but not for the current administration. "This pretty much shows the national security issue is a red herring," Peddie said. "Is it not a security issue if a tax can be collected?" Interestingly, shortly after the U.S. government said that it would grant export licenses to supply Nvidia's HGX H20 to China, unofficial sources close to the company said that it would not restart production of these processors, but would rather focus on something Blackwell-based. However, Nvidia did put a further order of 300,000 H20 GPUs shortly afterward. The production cycle of a 4nm-class processor at TSMC is around three months. Then, a data center GPU needs to be packaged, which will also take time. This means that Nvidia could theoretically get a fresh batch of H20s in mid-October at best. It likely makes little sense for Nvidia to produce more GH100/H20 silicon at this point, though the company probably has enough GH100/GH200 dies with defects that can be repurposed to H20s. But whether or not Nvidia can ship them to Chinese companies is now a political question. Chinese firms had already ordered around 700,000 HGX H20 AI accelerators (which are believed to be priced between $12,000 and $14,000 per unit), and it is unclear if the freeze affects these shipments, according to The Information. If it does, then Nvidia will remain without over $8.4 billion - $9.8 billion of revenue (as the company sells plenty of data center hardware with its GPUs) and the United States Government will remain without more than $1.26 billion or $1.47 billion of federal revenue. Nvidia has supplied samples of a modified Blackwell chip for the Chinese market and is developing another, potentially faster model pending U.S. export clearance. Donald Trump recently confirmed that the U.S. government may grant an export license of a Blackwell-based GPU for China, which would strip 30% to 50% of its full-fat performance. Even with a 30-50% performance cut, Nvidia's B100, B200, or B300 GPUs would still deliver far more power than anything available in China. Currently, the top option for Chinese firms is the H20 HGX, rated at 148 FP16/BF16 TFLOPS and 296 FP8 TFLOPS. A B100 reduced by half would still offer about 900 FP16/BF16 TFLOPS, 1.75 PF8 PFLOPS, and 3.5 FP4 PFLOPS -- unmatched by any domestic Chinese AI chip. The H20 HGX is already 3.3 to 6.69 times slower than a full H100, having been deliberately downscaled to comply with Biden-era export controls on advanced AI and HPC GPUs. However, even a B100 neutered by 50% will offer performance close to, or better than the H100. Developing China-specific Blackwell silicon might not be a good idea for Nvidia. While it would be cheaper to produce than B100/B200/B300, it might not meet the performance density requirements of the 2023 U.S. export controls. But then again, since shipments of the HGX H20 to China have become a political issue, previous formal guidelines may become irrelevant. "I think it would be a difficult task to try to apply logic and economics to a political issue," said Peddie. "[Export control rules] will change every day and depend on the latest political issues." For now, it only makes sense to wait and see what Nvidia and the U.S. government come up with, with regard to Blackwell-based products for China. But one thing is for sure: we know that it's coming, and that China might get beefier AI abilities once units land in the country, whenever that might be.

China state media says Nvidia H20 GPUs are unsafe and outdated, urges Chinese companies to avoid them -- says chip is 'neither environmentally friendly, nor advanced, nor safe'

A social media account linked to Chinese state media wrote an article on WeChat asserting that Nvidia's H20 chips are neither technologically advanced nor environmentally friendly. According to Reuters, the account, Yuyuan Tantian, is connected to China Central Television, which is a key organization in the country's state media (propaganda) apparatus. "When a type of chip is neither environmentally friendly, nor advanced, nor safe, as consumers, we certainly have the option not to buy it," Yuyuan Tantian said in the article (a translation, we assume). The H20 chip is Nvidia's answer to Washington's ban on high-end AI GPU exports to China. Although its performance is only a fraction of what the top-of-the-line H200 can accomplish, it still sold surprisingly well, resulting in Nvidia posting a record revenue despite temporarily falling under export control between April and July 2025. Aside from its reduced horsepower, Chinese authorities are also concerned with possible hidden geo-tracking and backdoors in the Green Team silicon. The U.S. Congress introduced a bill to enforce location tracking of high-end gaming and AI GPUs in mid-May, with the White House mulling doing the same earlier this month. Because of this, China has raised concerns about the security of the H20 chips that Nvidia sells in the country, even going as far as summoning the AI chip giant to explain if it had any backdoor security risks. This isn't the only criticism of Nvidia in Chinese media in recent times. People's Daily, the official newspaper of the Central Committee of the Chinese Communist Party, said that Nvidia should convince the Chinese people that its chips do not have security risks. However, the company has firmly denied any such risk, emphasizing that its GPUs have no kill switches, no backdoors, and no spyware. Although the headlining statement is not from a government source, China often uses state-linked social media accounts to shape its agenda and signal changes in its official stance without making a direct commitment. So, the criticism may be part of a broader campaign to steer domestic firms away from foreign AI hardware and toward homegrown alternatives like Huawei's Ascend chips. Despite all these issues, many Chinese organizations and entities still purchase Nvidia products. Aside from the massive demand for H20 AI GPUs, there's also a burgeoning black market for banned AI chips. It's been estimated that a billion dollars' worth of these GPUs have been sold in the past quarter, with some companies already advertising the upcoming B300, which is expected to arrive later this year. The WeChat post is likely the central government signaling its people to slowly move away from Nvidia's products and use alternative homegrown AI GPUs instead. However, the ecosystem that the company delivers makes its local competitors a much less compelling alternative.

Trump's Deal With Nvidia Offers Path Forward in Global Trade War

President Donald Trump's controversial plan to take a cut of revenue from chip sales to China has US companies reconsidering their plans for business with the country, offering a model for circumventing years of trade tensions. Experts and people familiar with the matter said the surprise deal, in which Nvidia Corp. and Advanced Micro Devices Inc. agreed to pay 15% of their revenues from Chinese AI chip sales to the US, provides a path to enter the Chinese market despite severe export controls, tariffs and other trade barriers.

China warns against using Nvidia H20s for government jobs

Don't need to give Uncle Sam any more reason to think kill switches are a good idea Nvidia may have the Trump administration's blessing to resume shipments of its H20 AI accelerators to China, but in Beijing, government officials are now pressuring companies to use what they describe as less-advanced semiconductors. According to a Bloomberg report citing unnamed persons familiar with the matter, Chinese authorities have sent letters to several firms discouraging the use of Nvidia's H20 GPUs for AI applications, particularly by those involved in government or national security-related work. In April, the US Commerce Department halted sales of Nvidia's H20 -- essentially a nerfed version of the company's more powerful H200 GPUs with reduced floating point performance and interconnect bandwidth. AMD's own China-spec GPU, the MI308, also saw a temporary block. However, by July, Nvidia and AMD revealed that they'd reached a deal with the US government to resume shipments of the accelerators. This deal, it was revealed this week, involved cutting Uncle Sam a check for 15 percent of H20 and MI308 revenues. Trump, on Monday, also suggested that Nvidia could convince him to allow shipments of a Blackwell-based accelerator in China if its performance was "negatively" enhanced by something like 30-50 percent. However, since announcing plans to resume H20 shipments in July, the chip has become a source of controversy as the Chinese government has raised concerns over the potential inclusion of location tracking tech, backdoors, and remote kill switches. Nvidia has denied these allegations. But while Nvidia denies the existence of any such capability today, it could be required to add such features in the future. Legislation that would mandate the inclusion of location verification tech is already gaining traction among lawmakers in the US House and Senate. Nvidia CEO Jensen Huang has previously dismissed the idea that Chinese military or government supercomputers would use its chips. In an interview with CNN's Fareed Zakaria earlier this summer, Huang argued that the Chinese military won't use his chips for the same reason that Uncle Sam wouldn't conceive of using theirs. It's also worth noting that US government's end use rules already prohibit China from deploying advanced semiconductors in its military supercomputers, though enforcing those rules once the chips are outside regulators' control remains a challenge. "The H20 is not a military product or for government infrastructure. China has an ample supply of domestic chips to meet its needs. It won't and never has relied on American chips for government operations, just like the US government would not rely on chips from China," Nvidia said in a statement to the media. "Banning the sale of H20 in China would only harm US economic and technology leadership with zero national security benefit." The letters Chinese authorities allegedly sent seem to reinforce this argument as they recommend avoiding the H20 for government or national security applications. As such, the letters may have less to do with encouraging the use of more sophisticated domestic accelerators like Huawei's CloudMatrix rack systems, which we've previously explored in depth, and more to do with convincing the US not to reinstate a sales ban or pursue kill switch mandates. ®

Trump's unusual Nvidia deal raises new corporate and national security risks, lawmakers and experts say

Aug 11 (Reuters) - U.S. President Donald Trump upended decades of U.S. national security policy, creating an entirely new category of corporate risk, when he made a deal with Nvidia (NVDA.O), opens new tab to give the U.S. government a cut of its sales in exchange for resuming exports of banned AI chips to China. Historically, the U.S. government made decisions to control the export of sensitive technologies on national security grounds. Those decisions were viewed as non-negotiable; if a technology was controlled, companies could not buy their way around those controls, no matter how lucrative the foregone foreign sales. On Monday, Trump raised the prospect of ending that era, saying he would allow Nvidia to sell its H20 chips to China in exchange for the U.S. government receiving a 15% cut of the company's sales of some advanced chips in that country. He made a similar deal with Nvidia's smaller rival AMD (AMD.O), opens new tab. He also told reporters he was open to allowing Nvidia to sell a scaled-down version of its current flagship Blackwell chips to China. Months earlier, his own administration had banned the sale of H20 chips to China, reversing the decision in July as part of what the government said were negotiations on rare earths. The latest move drew condemnation from U.S. lawmakers in both parties who warned that it risked creating a pay-for-play framework for the sale of sensitive technologies to U.S. adversaries, a concern echoed by analysts and legal experts. "Export controls are a frontline defense in protecting our national security, and we should not set a precedent that incentivizes the government to grant licenses to sell China technology that will enhance its AI capabilities," said U.S. Representative John Moolenaar, a Michigan Republican who chairs the House Select Committee on China. Representative Raja Krishnamoorthi of Illinois, the ranking Democrat on the same committee, said that "by putting a price on our security concerns, we signal to China and our allies that American national security principles are negotiable for the right fee." To be sure, the Trump administration has said the national security risks of resuming H20 sales are minimal because the chip was sold widely in China. U.S. Commerce Secretary Howard Lutnick last month described the H20 as Nvidia's "fourth-best chip" in an interview with CNBC. He said it was in U.S. interests for Chinese firms to keep using American technology. LEGAL? But the deal is extremely rare for the U.S. and marks Trump's latest intervention in corporate decision-making, after pressuring executives to invest in American manufacturing and demanding the resignation of Intel's INTC.O CEO, Lip-Bu Tan, over his ties to Chinese companies. It is unclear whether Trump's move is legal. The U.S. Constitution prohibits Congress from levying taxes and duties on articles exported from any state. Trade lawyer Jeremy Iloulian said it is hard to tell if this would be considered an "export tax" or some other form of payment without knowing more about the agreement. "Up until today, there has never been a consideration of how much companies need to pay to receive an export license," Iloulian said. Added Kyle Handley, a professor at the University of California San Diego School of Global Policy and Strategy: "It sure looks like an export tax to me ... they can call it whatever they want. It really looks a lot like the government is skimming a little bit off the top." When asked if Nvidia had agreed to pay 15% of revenue to the U.S., a company spokesperson said, "We follow rules the U.S. 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," the spokesperson added. A spokesperson for AMD said the U.S. approved its applications to export some AI processors to China but did not directly address the revenue-sharing agreement and said the company's business adheres to all U.S. export controls. ⁠"I think it's fair to say that everything now in this administration seems negotiable in ways that were not the case before," said Sarah Kreps, a professor at the Brooks School of Public Policy at Cornell University. "I don't think this is unique in that this will be the last kind of deal like this that we see." 'SLIPPERY SLOPE' Equities analysts said the levy could hit margins at chipmakers and set a precedent for Washington to tax critical U.S. exports. "It feels like a slippery slope to us," said Bernstein analysts, who expect the deal to cut gross margins on the China-bound processors by 5 to 15 percentage points, shaving about a point from Nvidia and AMD's overall margins. "Naturally, not only chipmakers but also companies selling other strategic products to China will wonder if the remittance model could apply to their industries," said Hendi Susanto, a portfolio manager at Gabelli, which holds shares in Nvidia. "For sellers of strategic products to China, remittance could be a burden - or a lifeline to preserve market access to huge and growing opportunities in China," Susanto said. Reporting by Karen Freifeld in New York, Arsheeya Bajwa in Bengaluru and Alexandra Alper in Washington; Additional reporting by Dietrich Knauth in New York; Writing by Stephen Nellis in San Francisco; Editing by Sayantani Ghosh and Matthew Lewis Our Standards: The Thomson Reuters Trust Principles., opens new tab

China urges local firms not to use Nvidia's H20 chips, Bloomberg News reports

Aug 12 (Reuters) - Chinese authorities have urged local companies to avoid using Nvidia's (NVDA.O), opens new tab H20 processors, particularly for government-related purposes, Bloomberg News reported on Tuesday, citing people familiar with the matter. Authorities have sent notices to a range of firms discouraging use of the less-advanced semiconductors, with the guidance taking a particularly strong stance against the use of Nvidia's H20s for any government or national security-related work by state enterprises or private companies, the report said. Reuters could not immediately confirm the report. Nvidia did not immediately respond to a request for comment outside regular business hours. Nvidia said in July that its products have no "backdoors" that would allow remote access or control after China raised concerns over potential security risks in the chipmaker's H20 artificial intelligence chip. U.S. President Donald Trump suggested on Monday that he might allow Nvidia to sell a scaled-down version of its next-generation advanced GPU chip, Blackwell, in China, despite deep-seated fears in Washington that China could harness U.S. AI capabilities to supercharge its military. The most advanced chip Nvidia is currently allowed to sell to China is the H20, which is based off the company's older Hopper architecture platform. The Trump administration green-lighted exports of H20 AI to China last month. The Trump administration last week also confirmed an unprecedented deal with Nvidia and AMD (AMD.O), opens new tab to give the U.S. government 15% of revenue from sales of some advanced chips in China. China's renewed guidance on avoiding chips also impacts AI accelerators from Advanced Micro Devices, the Bloomberg report said, adding that it was unclear whether any notices from Chinese authorities specifically mentioned AMD's MI308 chip. AMD did not respond to a request for comment outside regular business. Reporting by Ananya Palyekar in Bengaluru; Editing by Tom Hogue, Kim Coghill and Rashmi Aich Our Standards: The Thomson Reuters Trust Principles., opens new tab

China's Nvidia pushback is only just beginning

HONG KONG, Aug 12 (Reuters Breakingviews) - China's relationship with Nvidia (NVDA.O), opens new tab just got messier. Just one month after boss Jensen Huang's rockstar welcome in the People's Republic, state media has blasted the $4.4 trillion chipmaker's popular H20 processors over security concerns. Washington's latest plan to pocket 15% of Nvidia and AMD's (AMD.O), opens new tab high-end China sales will rankle Beijing even more. That puts customers like Tencent (0700.HK), opens new tab in an awkward spot. Nvidia's lucrative ties with the world's biggest importer of semiconductors have been upended by the trade war, geopolitics and the broader U.S-China rivalry in artificial intelligence. In April, U.S. President Donald Trump effectively banned the company from selling its China-specific H20 AI processor. That decision, which Huang said, opens new tab at the time would result in a $5.5 billion inventory writedown and $15 billion of lost revenue, was soon reversed as part of U.S. concessions to Beijing in exchange for continued supplies of rare earths. That's a huge relief to Nvidia. Sales in China are forecast to surge 185% to roughly $49 billion in the fiscal year to January, per Visible Alpha, and account for nearly a quarter of total revenue. Even that may be conservative: Trump on Monday said he was open to Nvidia selling a scaled-back version of its most advanced Blackwell chip to China. But the outlook is darkening once again. Washington's July "AI Action Plan" called, opens new tab for, among other things, stricter enforcement of export controls including "new and existing location verification features". That prompted China's cyberspace watchdog to summon Nvidia to a meeting. Last week, the U.S. company published, opens new tab a blog post in both English and Chinese reiterating that its chips did not have so-called backdoors, kill switches and spyware. Those assurances have not been enough. A couple of weeks ago the state-owned People's Daily published an opinion piece titled, "Nvidia, how can I trust you?"; that was followed on Sunday by another commentary elsewhere which criticised the H20 as a threat to security, technologically not that advanced and environmentally unfriendly. Worryingly, it concluded that China "certainly had the option not to buy it". It's likely the intended audience is the country's technology giants. Those include Tencent and TikTok-parent ByteDance, which are in the process of submitting applications for H20 chips, Reuters reported last month, citing people familiar with the matter. But Beijing is keen to wean the country off foreign technology and have them buy domestic offerings instead. Moreover, Trump's latest 15% revenue collection deal will result in national champions indirectly handing money to the U.S. government; that will not sit well with President Xi Jinping. The problem is, domestic AI chips from Huawei, Cambricon Technologies (688256.SS), opens new tab and others still have a long way to catch up to Nvidia's. And Huang has another formidable edge: its programming platform, CUDA, hosts many apps, frameworks and AI software that have become the industry's standard, making it hard and costly for customers to leave. Chinese unease toward Nvidia will only rise, but the country does not have much choice for now. Follow Robyn Mak on X, opens new tab. Context News Editing by Antony Currie; Production by Aditya Srivastav * Suggested Topics: * Breakingviews Breakingviews Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time. Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors. Robyn Mak Thomson Reuters Robyn Mak joined Reuters Breakingviews in 2013. Previously, she was a Research Associate for the Global Policy Programs at the Asia Society in New York. She has also worked at the Carnegie Endowment for International Peace in Washington DC and interned at several consulting firms, including the Albright Stonebridge Group. She holds a masters degree in international economics and international relations from the Johns Hopkins School of Advanced International Studies and is a magna cum laude graduate of New York University.

China urges firms not to use Nvidia's H20 chips, Bloomberg News reports

Aug 12 (Reuters) - Chinese authorities have urged local companies to avoid using Nvidia's (NVDA.O), opens new tab H20 processors, particularly for government-related purposes, Bloomberg News reported on Tuesday, citing people familiar with the matter. Authorities have sent notices to a range of firms discouraging use of the less-advanced semiconductors, with the guidance taking a particularly strong stance against the use of Nvidia's H20s for any government or national security-related work by state enterprises or private companies, the report said. Reuters could not immediately confirm the report. Nvidia did not immediately respond to a request for comment outside regular business hours. Nvidia said in July that its products have no "backdoors" that would allow remote access or control after China raised concerns over potential security risks in the firm's H20 artificial intelligence chip. U.S. President Donald Trump suggested on Monday that he might allow Nvidia to sell a scaled-down version of its next-generation advanced GPU chip in China, despite deep-seated fears in Washington that China could harness U.S. artificial intelligence capabilities to supercharge its military. The move could open the door to China securing more advanced computing power from the U.S. even as the two countries battled for technology supremacy, critics said. Reporting by Ananya Palyekar in Bengaluru; Editing by Tom Hogue and Kim Coghill Our Standards: The Thomson Reuters Trust Principles., opens new tab

China cautions tech firms over Nvidia H20 AI chip purchases, sources say

Aug 12 (Reuters) - Chinese authorities have summoned domestic companies including major internet firms Tencent (9888.HK), opens new tab and ByteDance over their purchases of Nvidia's (NVDA.O), opens new tab H20 chips, asking them to explain their reasons and expressed concerns over information risks, three people familiar with the matter told Reuters. The Cyberspace Administration of China (CAC) and other agencies also held meetings with Baidu (0700.HK), opens new tab and smaller Chinese tech firms in recent weeks, said one of the two people and a third source. The Chinese officials asked companies why they needed to buy Nvidia chips when they could purchase from domestic suppliers, the sources. Authorities also expressed concerns that materials Nvidia has asked companies to submit for U.S. government review could contain sensitive information including client data, one of the sources said. However, the people, who declined to be identified because the meetings were not public, said the companies have not been ordered to stop buying H20 chips. Nvidia said on Tuesday the H20 chip was "not a military product or for government infrastructure". "China has ample supply of domestic chips to meet its needs. It won't and never has relied on American chips for government operations, just like the U.S. government would not rely on chips from China," the statement said. Baidu, ByteDance, Tencent and the CAC did not immediately respond to requests for comment. Earlier on Tuesday, Bloomberg News reported that Chinese authorities have urged domestic companies to avoid using Nvidia's H20 chips, particularly for government-related purposes. Several companies were issued official notices discouraging the use of the H20, a less-advanced chip, mainly for any government or national security-related work by state enterprises or private companies, the report said, citing people familiar with the matter. In a separate report, The Information reported that ByteDance, Alibaba and Tencent had been ordered by the CAC in the past two weeks to suspend Nvidia chip purchases altogether, citing data security concerns. The CAC directive was communicated at a meeting the regulator held with over a dozen Chinese tech firms, shortly after the Trump administration reversed the export curbs on H20 chips, according to the Information report. Reuters could not immediately confirm the reports and Alibaba did not respond to a request for comment. Top contract chipmaker SMIC (0981.HK), opens new tab rose 5% on Tuesday on expectations of rising demand for locally-produced chips. But even without an outright ban, the concerns expressed by Chinese authorities could threaten Nvidia's recently restored access to the Chinese market as Chinese companies look to keep in step with regulators. Nvidia designed the H20 specifically for China after U.S. export restrictions on its more advanced AI chips took effect in late 2023. The H20 had since been the most sophisticated AI chip Nvidia was allowed to sell in China. Earlier this year, U.S. authorities effectively banned its sale to China, but reversed the decision in July following an agreement between Nvidia and the Trump administration. Last month, China's cyberspace regulator summoned Nvidia representatives, asking the company to explain whether the H20 posed backdoor security risks that could affect Chinese user data and privacy. State-controlled media have intensified criticism of Nvidia in recent days. Yuyuan Tantian, affiliated with state broadcaster CCTV, published an article on WeChat over the weekend claiming H20 chips pose security risks and lack technological advancement and environmental friendliness. The scrutiny threatens a significant revenue stream for Nvidia, which generated $17 billion from China sales in its fiscal year ended January 26 - or 13% of total revenue. China has accelerated work on domestic AI chip alternatives, with companies, such as Huawei (HWT.UL) developing processors that rival the H20's performance, and Beijing urging the technology sector to become more self-sufficient. However, U.S. sanctions on advanced chipmaking equipment, including lithography machines essential for chip production, have constrained domestic manufacturers' ability to boost production. On Monday, U.S. President Donald Trump suggested that he might allow Nvidia to sell a scaled-down version of its advanced Blackwell chip in China, despite deep-seated fears in Washington that Beijing could harness U.S. AI capabilities to supercharge its military. China's foreign ministry said on Tuesday it hoped the U.S. would act to maintain the stability and smooth operation of the global chip supply chain. The Trump administration last week confirmed an unprecedented deal with Nvidia and AMD (AMD.O), opens new tab, which agreed to give the U.S. government 15% of revenue from sales of some advanced chips in China. China's renewed guidance on avoiding chips also affects AI accelerators from AMD, Bloomberg also reported. It was not clear, however, whether any notices from Chinese authorities specifically mentioned AMD's MI308 chip. AMD did not respond to a request for comment outside regular business hours. Reporting by Reuters Staff and Ananya Palyekar and Surbhi Misra in Bengaluru; Additional reporting by Arsheeya Bajwa in Bengaluru; Editing by Saad Sayeed, Miyoung Kim, Kate Mayberry and Tomasz Janowski Our Standards: The Thomson Reuters Trust Principles., opens new tab

Chinese state media says Nvidia H20 chips not safe for China

BEIJING, Aug 10 (Reuters) - Nvidia's (NVDA.O), opens new tab H20 chips pose security concerns for China, a social media account affiliated with China's state media said on Sunday, after Beijing raised concerns over backdoor access in those chips. The H20 chips are also not technologically advanced or environmentally friendly, the account, Yuyuan Tantian, which is affiliated with state broadcaster CCTV, said in an article published on WeChat. "When a type of chip is neither environmentally friendly, nor advanced, nor safe, as consumers, we certainly have the option not to buy it," the article concluded. Nvidia did not immediately respond to a request for comment. H20 artificial intelligence chips were developed by Nvidia for the Chinese market after the U.S. imposed export restrictions on advanced AI chips in late 2023. The administration of U.S. President Donald Trump banned their sales in April amid escalating trade tensions with China, but reversed the ban in July. China's cyberspace watchdog said on July 31 that it had summoned Nvidia to a meeting, asking the U.S. chipmaker to explain whether its H20 chips had any backdoor security risks - a hidden method of bypassing normal authentication or security controls. Nvidia later said its products had no "backdoors" that would allow remote access or control. In its article, Yuyuan Tantian said Nvidia chips could achieve functions including "remote shutdown" through a hardware "backdoor." Yuyuan Tantian's comment followed criticism against Nvidia by People's Daily, another Chinese state media outlet. In a commentary earlier this month, People's Daily said Nvidia must produce "convincing security proofs" to eliminate Chinese users' worries over security risks in its chips and regain market trust. Reporting by Yukun Zhang and Brenda Goh; Editing by Saad Sayeed Our Standards: The Thomson Reuters Trust Principles., opens new tab

China warns companies against using Nvidia and AMD chips, report says

Authorities have recently told companies to avoid using the Nvidia chips, or those from Advanced Micro Devices, for government and national security use cases, according to the news outlet. The report comes after the White House confirmed on Monday that both Nvidia and AMD have agreed to give 15% of all China revenues to the U.S. government. Last month, both companies said they would soon resume China shipments after the administration started requiring export licenses earlier this year. Both Nvidia's H20 chip and AMD's MI380 were created to work around previous AI chip restrictions to China due to national security fears.

White House says it's working out legality of Nvidia and AMD China chip deals

U.S. President Donald Trump (L) invites Nvidia CEO Jensen Huang to speak in the Cross Hall of the White House during an event on "Investing in America" on April 30, 2025 in Washington, DC. The Trump administration is still working out the details of its 15% export tax on Nvidia and AMD and could bring deals of this kind to more companies, the White House's Karoline Leavitt said Tuesday. "Right now it stands with these two companies. Perhaps it could expand in the future to other companies," said Leavitt, the White House's spokesperson. "The legality of it, the mechanics of it, is still being ironed out by the Department of Commerce, and I would defer you to them for any further details on how it will actually be implemented," she continued. President Donald Trump confirmed on Monday that he had negotiated a deal with Nvidia in which the U.S. government approves export licenses for the China-specific H20 AI chip in exchange for a 15% cut of revenue. Advanced Micro Devices also got licenses approved in exchange for a proportion of its China sales, the White House confirmed. "I said, 'If I'm going to do that, I want you to pay us as a country something, because I'm giving you a release,'" Trump said Monday. "We follow rules the U.S. government sets for our participation in worldwide markets," Nvidia said in a statement this week. Trump said the export licenses for AMD and Nvidia were a done deal. But lawyers and experts who follow trade have warned that Trump's deal may be complicated because of existing laws that regulate how the government can charge fees for export licenses. The Commerce Department didn't immediately return a request for comment. The H20 is Nvidia's Chinese-specific chip that is slowed down on purpose to comply with U.S. export relations. It's related to the H100 and H200 chips that are used in the U.S., and was introduced after the Biden administration implemented export controls on artificial intelligence chips in 2023. Earlier this year, Nvidia said that it was on track to sell more than $8 billion worth of H20 chips in a single quarter before the Trump administration in April said that it would require a license to export the chip. Trump signaled in July that he was likely to approve export licenses for the chip after Nvidia CEO Jensen Huang visited the White House. The U.S. regulates AI chips like those made by Nvidia for national security reasons, saying that they could be used by the Chinese government to leapfrog U.S. capabilities in AI, or they could be used by the Chinese military or linked groups. The Chinese government has been encouraging local companies in recent weeks to avoid using Nvidia's H20 chips for any government or national security-related work, Bloomberg reported on Tuesday.

Chinese state media says Nvidia H20 chips not safe for China

Visitors visit the NVIDIA booth at the 3rd China International Supply Chain Expo in Beijing, China, on July 20, 2025. Nvidia's chips pose security concerns for China, a social media account affiliated with China's state media said on Sunday, after Beijing raised concerns over backdoor access in those chips. The H20 chips are also not technologically advanced or environmentally friendly, the account, Yuyuan Tantian, which is affiliated with state broadcaster CCTV, said in an article published on WeChat. "When a type of chip is neither environmentally friendly, nor advanced, nor safe, as consumers, we certainly have the option not to buy it," the article concluded. Nvidia did not immediately respond to a request for comment. H20 artificial intelligence chips were developed by Nvidia for the Chinese market after the U.S. imposed export restrictions on advanced AI chips in late 2023. The administration of U.S. President Donald Trump banned their sales in April amid escalating trade tensions with China, but reversed the ban in July. China's cyberspace watchdog said on July 31 that it had summoned Nvidia to a meeting, asking the U.S. chipmaker to explain whether its H20 chips had any backdoor security risks - a hidden method of bypassing normal authentication or security controls. Nvidia later said its products had no "backdoors" that would allow remote access or control. In its article, Yuyuan Tantian said Nvidia chips could achieve functions including "remote shutdown" through a hardware "backdoor." Yuyuan Tantian's comment followed criticism against Nvidia by People's Daily, another Chinese state media outlet. In a commentary earlier this month, People's Daily said Nvidia must produce "convincing security proofs" to eliminate Chinese users' worries over security risks in its chips and regain market trust.

Nvidia claps back against Chinese accusations its H20 chips pose a security risk

Chip giant Nvidia pushed back Sunday in response to allegations from Chinese state media that its H20 artificial intelligence chips are a national security risk for China. Earlier in the day, Reuters reported Yuyuan Tantian, an account affiliated with Chinese state broadcaster CCTV, said in an article published on WeChat that the Nvidia H20 chips are not technologically advanced or environmentally friendly. "When a type of chip is neither environmentally friendly, nor advanced, nor safe, as consumers, we certainly have the option not to buy it," the Yuyuan Tantian article reportedly said, adding that the article said chips could achieve functions including "remote shutdown" through a hardware "backdoor." In response, a Nvidia spokesperson told CNBC that "cybersecurity is critically important to us. NVIDIA does not have 'backdoors' in our chips that would give anyone a remote way to access or control them." Nvidia on Tuesday similarly rejected Chinese accusations that its AI chips include a hardware function that could remotely deactivate the chips, also known as a "kill switch." Tensions between the U.S. and China on semiconductor export controls have escalated in recent weeks, even after Nvidia resumed sales of its H20 chip to China. Chinese state media has framed the H20 chip as inferior and dangerous compared to Nvidia's other chips, while the company has defended its chips. The company's resumption of its H20 shipments reversed a previous ban on H20 sales that was placed in April by the Trump administration. Nvidia's H20 chips -- a less-advanced semiconductor compared to its flagship H100 and B100 chips, for example -- were developed by Nvidia for the Chinese market after initial export restrictions on advanced AI chips in late 2023. U.S. export controls on some Nvidia chips are rooted in national security concerns that Beijing could use the more advanced chips to gain an advantage broadly in AI, as well as in its military applications.

Trump's chip deal sets new pay-to-play precedent for U.S. exporters

President Donald Trump listens as Nvidia CEO Jensen Huang speaks about investing in the United States at a White House event on April 30. (Andrew Harnik/Getty Images) President Donald Trump's agreement with two leading American producers of computer chips to take a cut of their revenue in exchange for permission to export products to China introduced a striking new tactic to his transactional trade policy. In one fell swoop, the president indicated that he believes companies can be expected to pay their own government a slice of overseas sales despite a constitutional prohibition on export taxes, and overrode years of bipartisan concern about China's threat to American leadership in artificial intelligence. The deals will see Nvidia, the world's top producer of chips for AI, and competitor Advanced Micro Devices hand the U.S. government 15 percent of their revenue from selling certain chips in China. Trade and national security experts expressed concern Trump might use similar deals to wring concessions from other American tech firms or exporters. "I imagine the C-suites of many companies and many industries around the U.S. are now evaluating the potential that this kind of approach could be used against them," said Scott Kennedy, a longtime China expert who is a senior adviser and trustee chair at the Center for Strategic and International Studies think tank. "It would represent a real significant break with the way the U.S. government and businesses interact with each other," Kennedy said. Liza Tobin, who was appointed China director on Trump's National Security Council in 2019 and continued in that role under President Joe Biden until 2021, called the deals "a dangerous precedent." "These are national security restrictions on sensitive technology, and now we are basically putting them up for sale where major corporations can pay a fee and get rid of them," she said. Trump described the deal he struck with Nvidia during comments at a White House news conference Monday, saying that he told the company he expected something in return for permitting it to resume sales of its H20 chip in China after his government blocked exports in April. "I said, If I'm going to do that, I want you to pay us as a country something because I'm giving you a release," Trump said. He credited Nvidia CEO Jensen Huang with talking him down from an initial proposal that the government take a 20 percent cut of the company's Chinese revenue for H20 chips. White House officials confirmed the deal also applied to AMD, which makes its own version of the AI chips, known in the industry as Graphics Processing Units, or GPUs. The deal unlocks billions of dollars in potential sales for both companies. Nvidia previously said it would have sold about $7.1 billion worth of H20 chips in its financial quarter ending late April, but lost out on about a third of that when Trump banned exports. Under its new deal with the president, the company would have received all that revenue but owed $1.1 billion of it to the U.S. government. "We follow rules the U.S. 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," a spokesperson for Nvidia said Monday. Spokespeople for AMD did not return a request for comment. After details of the Nvidia and AMD deals emerged, legal experts pointed out they appear to conflict with the U.S. Constitution, which explicitly bans government from taxing exports. It is so far unclear where any legal challenge might come from. Shareholders could sue the companies, alleging executives gave up potential revenue by agreeing to Trump's deal. But the same investors might calculate it was better for the company to receive some revenue from China than to be cut off completely. Leading industry groups often vocal on trade policy opted to stay quiet after details of the deals emerged. The U.S. Chamber of Commerce and Semiconductor Industry Association, which have both been critical of Trump's tariffs, on Monday did not issue statements about the deals or respond to requests for comment. Representatives from three of the most prominent tech trade groups, the Information Technology Industry Council, Consumer Tech Association and the Computer & Communications Industry Association, also did not respond to requests for comment on Monday. Personal diplomacy Trump has repeatedly used trade policy and legal and political threats to shape the tech industry to his will since taking office in January, with top tech CEOs becoming regular visitors to the White House for public events and private meetings. Shortly after his inauguration, Trump dropped a lawsuit alleging Meta had censored him online after the Jan. 6, 2021 attacks when the company agreed to pay a $25 million settlement, most of which will go towards his presidential library. Apple, Nvidia and other tech firms have announced hundreds of billions of dollars of investment into the United States after Trump has repeatedly threatened tariffs on their Asian supply chains, at rates as high as 100 percent. The deals with Nvidia and AMD break new ground, ending years of relatively bipartisan U.S. policy on chip exports that have been dominated by national security concerns and supported by many leaders in the tech industry. As artificial intelligence became more important to the tech industry and Pentagon, Trump's first administration began to tighten export restrictions on selling advanced computer chips into China. Biden continued to ratchet up the controls and Nvidia responded by designing special, less powerful AI chips for China to comply with the export rules. After further rounds of AI breakthroughs, including the debut of ChatGPT, Biden in 2024 and then Trump this year tightened export rules again, banning the China-focused chips. Trump's in April shut down Nvidia's sales of its H20 chip, which the company said caused it to miss out on $2.5 billion of revenue in the first quarter. AMD told investors this month that it had to write off $800 million worth of inventory. In July, the White House reversed course, allowing companies to request new export licenses for their chips. The loosening of restrictions came after the announcement of a trade framework between the U.S. and China, which rolled back Chinese controls on exports of rare earth minerals to the U.S. The deals confirmed Monday by Trump and White House officials seem to have emerged from negotiations for obtaining those chip export licenses. Nvidia chief executive Jensen Huang visited the White House on Aug. 8. The policy flip is in part the result of internal fighting among Trump's allies, some of whom want to completely cut China off from advanced technology, while others support U.S. businesses who want to sell to Chinese firms, said a person who works closely with the administration but spoke on the condition of anonymity to avoid retribution. Tobin, the former National Security Council official, said the shift harmed U.S. interests. "It's short-term visible economic gain in exchange for laying out the red carpet for China to lead the world in AI," she said. Trump officials including David Sacks, the president's AI and crypto czar, and some geopolitical analysts have argued that it is better for the U.S. to supply Chinese technologists. The argument goes that allowing exports reduces the pressure on China to improve its own chips and AI technology. Advocates for that idea point to how despite the U.S. and allies placing restrictions on Chinese telecom company Huawei, it still became a world leader in the latest generation of mobile technology, known as 5G. "This is our chance to not make the Huawei mistake again ... western companies had the lead in telecom, we squandered it, and they ended up building the global telecommunications network," said James Andrew Lewis, a distinguished fellow at the Center for European Policy Analysis. "Now we're building the global data center AI network, and who would you rather have build it? Us or them?" Some chip exporters including Nvidia have seized on this idea. "America cannot repeat 5G and lose telecommunication leadership. America's AI tech stack can be the world's standard if we race," Nvidia said in its statement Monday in response to questions about the deal with Trump. The president in his comments Monday said giving China access to Nvidia's H20 chips wouldn't hurt the U.S. in the AI arms race because it was an "old chip" that Chinese companies had already replicated with their own technology. In recent days, state media in China has begun to cast aspersions on the H20, suggesting it might be a security risk for Chinese companies. But the huge demand Nvidia has reported for the chip in China suggests the country's AI developers believe it can help them advance. "They're still really good chips," said Tobin, the former White House national security official. Chris Miller, a professor of international history at the Fletcher School at Tufts University and author of "Chip War," a history of the geopolitics of computer chips, said it is unlikely that regaining access to American chips will slow down or stop China from developing its own domestically-produced alternatives. The country's government has spent years subsidizing research and development in semiconductors. "Even if China buys larger numbers of GPUs in the short run, the desire for self sufficiency remains quite strong and they're going to keep investing to build out their own internal capabilities in the long run," Miller said.

What investors see in the sale of AI chips to China

Why it matters: Shareholders are focusing on the revenue opportunities that come with more access to Beijing, not on the unprecedented involvement of the Trump administration in Nvidia's business dealings. What they're saying: "There's way more upside," Daniel Newman, principal analyst and CEO of The Futurum Group, tells Axios. Catch up quick: The Trump administration previously backed export controls on Nvidia's H20 chips, which are "orders of magnitude" less powerful than Nvidia's Blackwell chips, Newman says. * A month ago, the administration signaled that it was shifting course on these controls, but did not issue the licenses required for sales to be possible. * That appeared to change after Nvidia CEO Jensen Huang met with President Trump. * Nvidia walked away with promises of licenses so long as the chip giant cut the U.S. government a check for 15% of its China revenue. Zoom in: Nvidia stock is up nearly 0.5% since the news broke Monday, with investors and analysts bullish on the deal. * The lifting of the export controls could lead to a $15 billion revenue windfall for Nvidia. * Both Nvidia and AMD have pricing power, given the strength of demand for AI chips in China, according to a note from Bank of America. * That means the 15% expense could be passed on to Chinese customers. Between the lines: While the deal could lead to billions of dollars in additional revenue for the U.S. government, it's not just about the money. It's also about access to rare earth magnets, Newman says. * The U.S. has powerful AI chips that China wants. * China has rare earth metals the U.S. wants. * When the administration first changed course on export controls in July, Commerce Secretary Howard Lutnick told CNBC that selling the "fourth best" AI chip to China wasn't material. * Lutnick also said the export control rollback was tied to a rare earths deal, though those details have not fully materialized. Yes. but: Export controls are typically put in place for a reason: in this case, national security concerns. * The 15% revenue split, first reported by the Financial Times, includes an anonymous source quote that points to the security concerns: * "What's next -- letting Lockheed Martin sell F-35s to China for a 15% commission?" Situational awareness: Beijing is urging local companies to avoid buying chips from American companies because of its own security concerns. * Newman says that may be political theater - an effort for China to keep the upper hand in ongoing negotiations. * Chinese companies will likely still want access to the best possible chips. Be smart: In just January of this year, investors feared China outpacing the U.S. in the AI arms race given the reported success of DeepSeek.

What to Know About Trump's Nvidia Deal and China's Response

The world's most valuable company is now at the center of President Donald Trump's trade war with China. Trump said Monday that he has cut a deal with chipmaker Nvidia, allowing it to sell certain artificial intelligence chips to China in exchange for a cut of the revenue, which would go to the U.S. government. Trump said he also negotiated a similar deal with chipmaker Advanced Micro Devices (AMD). The deal is a marked departure from an effort by the U.S. to restrict China's access to advanced semiconductors over concerns that they would be used to advance the country's military technology. Washington began restricting exports of some semiconductors to China in 2022, although Nvidia was able to export a specially made-for-China chip, the H20, which is deliberately slowed down.

Trump's Nvidia deal for China sales raises security concerns

The U.S. government is about to be Nvidia's business partner in China. The major chipmaker recently struck a profit-sharing deal with the Trump administration to send over 15% of the revenue gained from sales of its H20 microchip, one that's geared towards the Chinese market and meant to power AI systems. The agreement also included Advanced Micro Devices, a Nvidia competitor. Trump on Monday sought to downplay the capabilities of the H20 chip, calling it an "old chip" that doesn't offer cutting-edge capabilities. The president said he negotiated with Nvidia chief executive Jensen Huang after initially seeking a 20% cut of its Chinese chip sales "for the country." The arrangement, though, has raised eyebrows among trade and security experts who are concerned about the transactional nature of a U.S. firm buying off access into a foreign adversary's market with U.S. national security taking a backseat. "It undercuts the whole idea of export controls, which are supposed to be premised on national security," said Evan Feigenbaum, a former Bush administration official who's now an Asia expert at the Carnegie Endowment for International Peace. "If the government waives these in exchange for payoff, then the government is signaling that 'national security' is negotiable and up for bidding." Others argued that the Nvidia deal sets the stage for the Chinese government to narrow the AI gap. "China's lack of unfettered access to U.S.-designed AI chips is America's clearest advantage in the AI race," Matthew Pottinger and Liza Tobin, a pair of former Trump national security officials, wrote in a Free Press op-ed. "By reversing the ban, the White House is helping Beijing's Communist regime close the gap." The White House on Tuesday also didn't close the door to replicating the deal for other firms. "The legality of it, the mechanics of it, is still being ironed out by the Department of Commerce," said White House Press Secretary Karoline Leavitt at Tuesday's daily press conference. "This was another idea of the president and his brain trust on his trade team to try to get good deals for the American people." Other administration officials shrugged off lingering worries about China accessing advanced U.S. technology. "There are no national security concerns," Treasury Secretary Scott Bessent said in a Bloomberg TV interview, adding they don't want Chinese AI chips to become the global standard either. The Commerce Department didn't respond to a request for comment about the timeline of implementing the profit-sharing deal. Nvidia has said in a statement that they "follow rules the US government sets for our participation in worldwide markets." The Trump administration is still negotiating with Beijing on a raft of other issues, including resolving a standoff on trade and landing a possible TikTok sale. Some Democrats questioned how the White House would treat other matters where U.S. national security and economic interests were at stake. "So now the US government is financially motivated to sell AI to China?" Democratic Rep. Jake Auschincloss wrote on X. "Makes me shudder to think what a TikTok deal might look like." Even some Republican lawmakers started to express reservations. GOP Rep. John Moolenaar of Michigan, who chairs the House Select Committee on the Chinese Communist Party, said in a statement that he was "concerned" by the development and questioned whether it was legal. "We should not set a precedent that incentivizes the Government to grant licenses to sell China technology to enhance its AI capabilities," Moolenaar said. The Trump administration initially slapped a ban on Nvidia's semiconductor sales without an export license in April. But it backtracked three months later after heavy lobbying by Huang, who doesn't share a combative view towards Beijing like the national security hawks in Washington. Nvidia earned $17 billion in China last year, around 13% of its total annual revenue. In its quest to preserve its foothold in the lucrative Chinese semiconductor market, Nvidia may trigger blowback for appearing too close to the Trump administration. The Chinese government is pressing domestic, private companies, and state-owned enterprises to justify their purchases of Nvidia's H20 chips and warned against using them, Bloomberg reported. Indeed, Trump's Nvidia deal could quickly crash into constitutional and other legal obstacles at home before it ever comes to fruition. The Constitution bars the federal government from imposing export taxes on U.S. goods. Peter Harrell, a former Biden administration trade official, pointed out that a 2018 federal law explicitly prohibits fees for export licenses. It was signed by President Trump in his first term. Trump, though, has muscled ahead in increasingly steering the U.S. economy on a path that fits his nationalist agenda, most notably by imposing a barrage of tariffs on imports from almost every country in the world. Now, a tax on some U.S. exports might be in the cards. On Monday, Trump suggested he'd be open to allowing Nvidia to sell a downgraded version of its most advanced Blackwell chip in China -- as long as the federal government can take a cut of those sales too. Feigenbaum argued that the Nvidia deal comes at the expense of smaller businesses that are simply unable to offer similarly-sized profits to the U.S. government. "That's anti-competitive," he said, "which is ironic for a supposedly 'conservative and 'free market' administration, since it favors rich and big firms while pulling the rug out from under smaller ones."

U.S.-China chip war: How Trump's Nvidia-AMD deal has redefined Washington's export control policy

Under both the first Trump and Biden administrations, Washington argued that it needed to limit China's technological development by barring more and more sensitive products from being exported to its strategic rival. Now, Trump's decision to allow Nvidia and AMD to sell their advanced AI chips to China in exchange for a 15% cut of their revenue turns the export control regime into something like a bargaining chip. The Trump administration is already positioning the deal as a playbook for other products and industries. "Now that we have the model and the beta test, why not expand it?" U.S. Treasury Secretary Scott Bessent said on Bloomberg TV on Wednesday. Trump's move reflects Washington's uneasy position in its tech rivalry with Beijing. The lead the U.S. holds over China in AI and semiconductors is shrinking, with experts estimating a lead of just one to two years at most. Meanwhile, U.S. companies complain of being shut out of the world's second-largest economy. And now China is adopting the U.S.'s tactic of export controls, using its wealth of rare earth metals -- key materials used in an array of electronic goods -- to put pressure on Washington and its allies. Analysts that spoke to Fortune view Trump's Nvidia deal as a one-off measure stemming from the president's trade negotiations with China. Ray Wang, a semiconductor researcher at the Futurum Group, points out that the Trump administration first signaled that it would issue export licenses for Nvidia's H20 processor -- an AI chip designed to comply with U.S. rules -- in late July, as part of its trade war truce with Beijing. Wang suggests that the government's 15% cut, agreed upon over the weekend, is an add-on, an "opportunity to raise government revenue," in accordance with Trump's broader goals. But the damage to the export control regime may have already been done, says Jennifer Lind, an associate professor at Dartmouth University and international relations expert. "This deal suggests that under the Trump administration, what gets banned or permitted is not being driven by careful calculations about the effect on Chinese military power -- but rather on political whim and personalist politics," Lind explains. "This is ruinous for a functioning export control regime." On Monday, Trump confirmed media reports that Nvidia and AMD had agreed to give 15% of their China sales to the U.S. government in exchange for export licenses. The chips in question are Nvidia's H20 and AMD's MI308, two AI processors designed for the Chinese market and tailored to comply with earlier U.S. export controls. In that same press conference, Trump suggested he might even let Nvidia sell a watered-down version of its leading Blackwell processor to China. Export controls have changed wildly in the past few months. In April, Nvidia revealed that the U.S. had blocked it from selling the H20 to China, and that it was taking a $5.5 billion charge on the unsold inventory. As Washington and Beijing escalated their trade war, the export controls ramped up. By late May, the U.S. had expanded controls to block the sale of chip design software and airplane parts, among other products and chemicals, to China. Then, almost as quickly as they were imposed, these export controls disappeared. As part of its trade negotiations with China, the U.S. agreed to scale back controls on chip design software and airplane parts. Officials argue that these agreements are needed to get China to loosen its own controls on rare earth magnets, which threaten several U.S. industries like automobiles and defense. Some lawmakers worried about the growing tech dominance of China fear that Trump's deal sets a bad precedent. John Moolenar, a Republican who chairs the House Select Committee on China, argued that "we should not set a precedent that incentivizes the government to grant licenses to sell China technology that will enhance its AI capabilities." His Democratic counterpart, Raja Krishnamoorthi, suggested that "by putting a price on our security concerns, we signal to China and our allies that American national security principles are negotiable for the right fee." Backlash to the deal might prevent further erosion of the export regime, says Chris Miller, author of Chip War: The Fight for the World's Most Critical Technology. "We're going to see some pushback against the H20 decision in the U.S. from Congress, the media, and the bureaucracy, which will likely also discourage a further weakening of controls," Miller says. The Biden administration framed export controls as a national security measure, designed to maintain and expand the U.S.'s technological edge versus China. The Trump administration has used similar reasoning in the past. But now he seems to be treating the chip controls as tools for economic dealmaking, raising questions as to what might come next. "There's no real leadership on this issue with the White House now, as there was in the Biden era," Paul Triolo, a partner at the DGA-Albright Stonebridge Group, said at the Fortune Brainstorm AI Singapore conference in mid-July, after the first announcement that Trump would allow the H20 to be sold in China again. "We're in a little bit of a weird moment." It's unclear, however, how effective the export controls have been at throttling tech development in China. The country's tech sector, in spite of the export controls, seems to have developed satisfactory processors and powerful AI models. Huawei, the Chinese tech giant, is working with chipmaking giant SMIC to make its own AI processors. Huawei's Ascend chips still lag Nvidia's most advanced products, yet compare favorably to Nvidia's chips sold in China. This momentum puts the U.S. in a difficult position. It could double down on controls in the hope of restraining Chinese innovation in the short-term -- even if, in the long run, China's domestic industry becomes self-sufficient. Or it can relax its curbs, retaining market access and hope that China never invests in domestic alternatives. U.S. officials, it seems, now believe it's better for Nvidia to keep selling to China. "You want to sell the Chinese enough that their developers get addicted to the American technology stack," U.S. Commerce Secretary Howard Lutnick said on CNBC in mid-July, soon after reports emerged that Nvidia would be allowed to sell the H20 in China again. (Lutnick also dismissed the H20 as Nvidia's "fourth-best" chip.) "What we don't want is for Huawei to have a digital Belt and Road," Bessent said Wednesday, referring to China's strategy to build infrastructure in emerging markets around the world. "We do not want the standard to become Chinese." Chinese pressure likely played a role in getting Trump to let Nvidia and AMD chips back into China. While China had slowly started to limit exports of rare earths in recent years, Beijing stopped exports entirely as part of its retaliatory measures to Trump's tariffs earlier this year. Officials demanded that Chinese exporters apply for licenses before they sell to any overseas clients. The suspension froze industries in both the U.S. and Europe. China is the source of around 90% of the world's rare earths, thanks to a years-long project to invest in domestic processing. Governments are starting to invest in non-Chinese sources, but it may take years for such projects to come to fruition. After winning over Washington, Nvidia and CEO Jensen Huang may now need to win over Beijing. Chinese officials have warned companies working in government-related areas against using Nvidia's chips, Bloomberg reported on Tuesday. Chinese state media have also gone after the H20. "When a type of chip is neither environmentally friendly, nor advanced, nor safe, as consumers, we certainly have the option not to buy it," a CCTV-affiliated WeChat posted on Sunday. And after Michael Kratsios, one of the U.S.'s leads on AI policy, suggested that Nvidia chips could contain "location-tracking" to combat chip smuggling, Chinese regulators summoned Nvidia executives to a meeting to explain whether H20 chips contained security risks. The furor was enough to push Nvidia to forcefully state that "Nvidia GPUs do not and should not have kill switches and backdoors." Wang, the researcher at the Futurum Group, points out that China's private sector -- big tech companies like Alibaba and Tencent and smaller startups like Moonshot -- will consume the vast majority of Nvidia's chips. "They really need those chips to train and develop their AI," Wang says. "I don't believe the guidelines from the government will stop this behavior."

Why Nvidia and AMD's China pay-to-play deal with Trump could backfire

The companies making the most money from the AI boom are the ones selling the processors, such as Nvidia and AMD. On Monday those two chip giants cut a deal with the Trump administration that will allow them to sell their products into the China market. For Nvidia -- the dominant provider of AI chips powering the generative AI boom -- the agreement means that it can once again sell its H20 chip to Chinese developers. It's the latest chapter in a long saga. The Biden administration blocked the sale of Nvidia's most powerful AI chips to China in 2022, but deemed the sale of the less powerful H20 chip an acceptable national security risk. The Trump administration continued blocking sales of Nvidia's H200 and Blackwell chips. But in April, it went a step further by effectively blocking the sale of the H20 chips, too. The new deal shows that Nvidia CEO Jensen Huang's charm offensive in Washington, D.C., convinced the Trump administration that the U.S.'s technological, economic, and national security goals are best served when the world's AI models and apps are built to run on chips made by U.S.-based companies (like Nvidia). Or maybe the Trump Administration just wanted a piece of the action all along. The administration exploited its jurisdiction over export policy to extract a percentage of Nvidia and AMD's Chinese sales payable to the U.S. Treasury.

US government will use 15% sales tax on NVIDIA and AMD AI GPUs to China to pay down debt

TL;DR: The US government will impose a 15% sales tax on NVIDIA and AMD AI chips exported to China, using the revenue to reduce US debt. This policy, initiated under the Trump administration, aims to balance economic benefits with national security by restricting advanced chip exports while countering Chinese technology dominance. The US government will be charging NVIDIA and AMD a 15% sales tax on AI chips sent to China, with reports suggesting they'll use that 15% sales tax to pay down US debt. During a recent interview with US Treasury Secretary Scott Bessent, he was asked about where the agreement with NVIDIA came from. Bessent discussed that Trump came up with the deal, adding that "the President is one of the most open-minded people I know. He does everything at first principles. Why did we do things this way? Why shouldn't we do it the other way?" Bessent believes that the new deal would be beneficial to NVIDIA and other chip makers, providing them with a path to "expand into China that can make NVIDIA chips the bellwether for Chinese technology and then the US taxpayer gets a share of that". He also remained open to the agreement being applied outside of the technology industry, but reiterated that right now in its current form, it is unique to NVIDIA and AMD. The Treasury Secretary was asked if the US government was compromising national security concerns, or putting a "price" on them, to which he said that there are no security concerns as the NVIDIA H20 AI GPUs aren't the bleeding-edge AI semiconductors. Bessent said: "there are no national security concerns here. We would not sell any of the advanced chips. So the H20s, I don't know whether you'd say they are four, five, six levels down the chip stack". He added: "What we do not want here... is more Huawei to have a digital Belt and Road. So we do not want the standard to become Chinese across the world or even in China". It was just a couple of hours ago that reports hit that the Trump administration is looking at taking a stake in Intel in order to improve US domestic semiconductor manufacturing, mixed with a 15% sales tax on NVIDIA and AMD AI chips sold in China. The Trump administration is moving fast with some industry-wide changes, that's for sure. The US Treasury Secretary continued, where after NVIDIA received its H20 export licenses, multiple reports surfaced that the Chinese government was worried about backdoors and tracking systems in products sent to China, and has been advising Chinese companies to not rely on NVIDIA products. Bessent takes the concern as a sign that China worried "about the NVIDIA chips becoming the standard in China". He said that he agrees with the assessment that the Chinese are stealing US technology, with Bessent adding: "Look, NVIDIA's an incredible product. A lot of the technology is in China, you know, they're piggybacking, and I would use piggybacking as kind of a word for acquiring our technology".

Nvidia denies H20 AI chip "back doors" for China

David Reber Jr., Nvidia's Chief Security Officer, stated in a blog post last week that "There are no back doors in Nvidia chips. No kill switches. No spyware. That's not how trustworthy systems are built -- and never will be." Nvidia Corp. addressed Chinese regulator concerns regarding "tracking and positioning" risks in its H20 AI chips, with its Chief Security Officer denying the presence of undisclosed functionalities. The company's response follows a summons from China's cyberspace regulator and precedes a broader U.S. policy discussion on technology export tracking. Nvidia stock closed higher by 1.06% to $182.74 on Friday. David Reber Jr., Nvidia's Chief Security Officer, stated in a blog post last week that "There are no back doors in Nvidia chips. No kill switches. No spyware. That's not how trustworthy systems are built -- and never will be." Reber further elaborated that any secret access designed to remotely disable hardware or monitor usage would ultimately pose a significant vulnerability, potentially exploitable by external parties. He characterized such hidden controls as "dangerous vulnerabilities that need to be eliminated," asserting that hard-coded, single-point controls would be "a gift to hackers and hostile actors." This denial by Nvidia occurred after the U.S. partially eased export restrictions on Nvidia's H20 accelerators designated for China, which subsequently led to increased scrutiny from Beijing. China's Cyberspace Administration formally requested the chipmaker provide clarification regarding potential "back doors" in the chips. Simultaneously, U.S. officials initiated examinations into methods for more effectively monitoring the final destinations of advanced accelerator technologies. Discussions in Washington, D.C., are progressing concerning related policy measures. A proposed "Chip Security Act" is currently under consideration, which aims to incorporate location verification mechanisms for export-controlled AI chips and certain high-end consumer GPUs. Representative Bill Huizenga (R-Mich.), a sponsor of this proposed legislation, informed the Washington Post that the measure would not mandate "spyware" or "kill switches," describing claims to the contrary as "disingenuous." Enforcement activities are also intensifying in this domain. The Justice Department recently filed charges against two Chinese nationals. These individuals were accused of illicitly smuggling restricted GPUs worth tens of millions of dollars into China by routing them through various third countries.

Analysis-Trump's Unusual Nvidia Deal Raises New Corporate and National Security Risks, Lawmakers and Experts Say

By Karen Freifeld, Arsheeya Bajwa and Alexandra Alper (Reuters) -U.S. President Donald Trump upended decades of U.S. national security policy, creating an entirely new category of corporate risk, when he made a deal with Nvidia to give the U.S. government a cut of its sales in exchange for resuming exports of banned AI chips to China. Historically, the U.S. government made decisions to control the export of sensitive technologies on national security grounds. Those decisions were viewed as non-negotiable; if a technology was controlled, companies could not buy their way around those controls, no matter how lucrative the foregone foreign sales. On Monday, Trump raised the prospect of ending that era, saying he would allow Nvidia to sell its H20 chips to China in exchange for the U.S. government receiving a 15% cut of the company's sales of some advanced chips in that country. He made a similar deal with Nvidia's smaller rival AMD. He also told reporters he was open to allowing Nvidia to sell a scaled-down version of its current flagship Blackwell chips to China. Months earlier, his own administration had banned the sale of H20 chips to China, reversing the decision in July as part of what the government said were negotiations on rare earths. The latest move drew condemnation from U.S. lawmakers in both parties who warned that it risked creating a pay-for-play framework for the sale of sensitive technologies to U.S. adversaries, a concern echoed by analysts and legal experts. "Export controls are a frontline defense in protecting our national security, and we should not set a precedent that incentivizes the government to grant licenses to sell China technology that will enhance its AI capabilities," said U.S. Representative John Moolenaar, a Michigan Republican who chairs the House Select Committee on China. Representative Raja Krishnamoorthi of Illinois, the ranking Democrat on the same committee, said that "by putting a price on our security concerns, we signal to China and our allies that American national security principles are negotiable for the right fee." To be sure, the Trump administration has said the national security risks of resuming H20 sales are minimal because the chip was sold widely in China. U.S. Commerce Secretary Howard Lutnick last month described the H20 as Nvidia's "fourth-best chip" in an interview with CNBC. He said it was in U.S. interests for Chinese firms to keep using American technology. LEGAL? But the deal is extremely rare for the U.S. and marks Trump's latest intervention in corporate decision-making, after pressuring executives to invest in American manufacturing and demanding the resignation of Intel's CEO, Lip-Bu Tan, over his ties to Chinese companies. It is unclear whether Trump's move is legal. The U.S. Constitution prohibits Congress from levying taxes and duties on articles exported from any state. Trade lawyer Jeremy Iloulian said it is hard to tell if this would be considered an "export tax" or some other form of payment without knowing more about the agreement. "Up until today, there has never been a consideration of how much companies need to pay to receive an export license," Iloulian said. Added Kyle Handley, a professor at the University of California San Diego School of Global Policy and Strategy: "It sure looks like an export tax to me ... they can call it whatever they want. It really looks a lot like the government is skimming a little bit off the top." When asked if Nvidia had agreed to pay 15% of revenue to the U.S., a company spokesperson said, "We follow rules the U.S. 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," the spokesperson added. A spokesperson for AMD said the U.S. approved its applications to export some AI processors to China but did not directly address the revenue-sharing agreement and said the company's business adheres to all U.S. export controls. ⁠"I think it's fair to say that everything now in this administration seems negotiable in ways that were not the case before," said Sarah Kreps, a professor at the Brooks School of Public Policy at Cornell University. "I don't think this is unique in that this will be the last kind of deal like this that we see." 'SLIPPERY SLOPE' Equities analysts said the levy could hit margins at chipmakers and set a precedent for Washington to tax critical U.S. exports. "It feels like a slippery slope to us," said Bernstein analysts, who expect the deal to cut gross margins on the China-bound processors by 5 to 15 percentage points, shaving about a point from Nvidia and AMD's overall margins. "Naturally, not only chipmakers but also companies selling other strategic products to China will wonder if the remittance model could apply to their industries," said Hendi Susanto, a portfolio manager at Gabelli, which holds shares in Nvidia. "For sellers of strategic products to China, remittance could be a burden - or a lifeline to preserve market access to huge and growing opportunities in China," Susanto said. (Reporting by Karen Freifeld in New York, Arsheeya Bajwa in Bengaluru and Alexandra Alper in Washington; Additional reporting by Dietrich Knauth in New York; Writing by Stephen Nellis in San Francisco; Editing by Sayantani Ghosh and Matthew Lewis)

Trump's China deal on AI chips prompts significant security concerns

President Trump's reversal on previously blocked chip sales to China has sparked cries that the White House is selling out America's security concerns in a bid to raise revenue. Trump on Monday agreed to allow tech giants Nvidia and AMD to secure export licenses to sell their advanced artificial intelligence (AI) chips in China in exchange for a 15 percent cut of the profits. The White House said Tuesday that more such deals could be on the table. The unusual deal doesn't just raise legal questions. Experts say the U.S. should be wary of turning over American-made technology that could boost its adversary's AI capabilities, at a time when the two countries are fiercely competing for dominance. The security concerns appear to be a two-way street. China urged tech companies there to avoid any purchase of the chip, citing security issues. The move once again has Trump at odds with Congress's China hawks, who argue the administration is shortchanging America's national security interests to make a buck. Rep. Raja Krishnamoorthi (Ill.), the top Democrat on the House Select Committee on the Chinese Communist Party, in a statement said the most troubling part of the deal was a contradiction at the heart of the policy. "The administration cannot simultaneously treat semiconductor exports as both a national security threat and a revenue opportunity," he said. "By putting a price on our security concerns, we signal to China and our allies that American national security principles are negotiable for the right fee." The same panel's GOP chair, Rep. John Moolenaar (Mich.), said there are "questions about the legal basis" for such a deal. "Export controls are a frontline defense in protecting our national security, and we should not set a precedent that incentivizes the Government to grant licenses to sell China technology that will enhance its AI capabilities," he said in a statement. Greenlighting the sales marks a reversal for the Trump administration, which in April initially imposed restrictions on Nvidia's H20 chip and AMD's MI308 chip, effectively blocking shipments to China. Commerce Secretary Howard Lutnick has argued China is only receiving Nvidia's "fourth best" chip, but this has done little to assuage concerns. The administration has increasingly taken up the mantle, supported by the semiconductor industry, that the U.S. should focus on boosting the adoption of U.S. technology abroad rather than imposing more stringent export restrictions. The reasoning follows that the best way to win the AI race is to keep China dependent on American-made chips and prevent Huawei from gaining ground both inside and outside of China. Others contend this will simply boost Beijing's capabilities in a way that would be impossible without the U.S. technology. "We've got to realize we're in an intellectual war, a technology war with China, and we're in an AI competition. Having Nvidia providing this technology to China is a mistake," Rep. Don Bacon (R-Neb.) said during an appearance on "The Hill" on NewsNation. "China getting our chips is not a good deal." National security experts say the risks are manifold. Not only do the sales boost China in what many see as a technological cold war, it also opens the door to the risk the communist government could use chips for military technology or other uses that directly threaten the U.S. Liza Tobin, who served as China director at the National Security Council under the first Trump and Biden administrations, said chip producers only have so much capacity, so shipping them to China shortchanges others. "It's putting a priority on China's AI development at the expense of American or other countries' AI development," she told The Hill. She also expressed concern over chips being used for "malign purposes that potentially harm and kill American men and women in uniform." "These chips themselves are inherently dual use. It's not like these are just made for the military or have some limit on them to only be allowed for cat food apps. That's just not how it works." Nvidia on Tuesday argued the sales will help the U.S. become a technology leader with little risk to either party. "As both governments recognize, the H20 is not a military product or for government infrastructure," the company said in a statement. "China has ample supply of domestic chips to meet its needs. It won't and never has relied on American chips for government operations, just like the U.S. government would not rely on chips from China. Banning the sale of H20 in China would only harm U.S. economic and technology leadership with zero national security benefit." Peter Harrell, a nonresident fellow at the Carnegie Endowment for International Peace, said the export control licenses Trump is now negotiating with companies were expressly designed to weigh those types of national security risks. "It's a very troubling precedent because historically when we've been looking at export control licenses, it's been strictly speaking a national security review," Harrell said. "Does the export of this widget threaten U.S. national security? Whereas now, there's also going to be this factor of, 'Well maybe it does threaten U.S. national security ... but hey, we got some money from it.'" "I think it would be quite negative for us if we get in the business of 'We're happy to arm our adversaries as long as they pay us a bit of money to do so.' I hope that's not where we are. I do worry that this could become a broader precedent." White House press secretary Karoline Leavitt said Tuesday that the administration would consider other similar arrangements in spite of legal concerns. "Right now, it stands with these two companies. Perhaps it could expand in the future to other companies," Leavitt said. "I think it's a creative idea and solution. The legality of it, the mechanics of it is still being ironed out by the Department of Commerce." "This was another idea of the president and his brain trust on his trade team to try to get good deals for the American people and the American taxpayer," she added. It's not clear such deals would be legal. Export taxes are barred by the Constitution, while fees for export licenses are prohibited under federal law. However, it's unclear whether the 15 percent cut from Nvidia and AMD's chip sales would count as a formal tax or fee, as well as whether anyone would bring such a challenge. Still, several raised concerns about the precedent set by the deal, noting there are many other American-made products China would be interested in purchasing that could be detrimental to U.S. interests. "Are we now going to see the Commerce Department shaking down high-tech exporters generally for a 15 percent cut? Are we going to see the State Department, which regulates exports of defense weaponry, start shaking down defense exporters for a 15 percent cut?" Harrell asked. "I have to assume that there would be some lines, maybe it is F-35s. Would he sell nuclear weapons? You have to think there are some lines that Trump wouldn't cross. But this is blowing past a bunch of past precedent, and I think suggests that whatever lines he does have that he would not be willing to cross are very, very different from the lines any previous president would have had." Rep. Jake Auchincloss (D-Mass.) noted that Trump has also sought to bypass a law passed by Congress and signed by former President Biden that would block the popular app TikTok unless the China-based ByteDance sells the company. Born out of fears that Chinese law could require the app to hand over data on Americans, Trump has punted enforcement, signing three separate extensions. "So now the US government is financially motivated to sell AI to China?" Auchincloss wrote on the social platform X. "Makes me shudder to think what a TikTok deal might look like." Tobin, however, said China is likely to set their sights on securing more advanced chips than the H20, including the Blackwell, which is still under development. Trump suggested Monday that he would consider making a deal on a reduced-capacity version of the Blackwell. Trump's dealmaking, Tobin said, will suggest to the Chinese that such things are now open to negotiation, a dynamic she warns the government is also using with Nvidia. China's warning not to immediately order Nvidia's chips serves a twofold purpose, she said, one that allows them to exert some control over the company while opening the door to demanding information about the chips that could aid in their replication. "They know there are technical means that could potentially be weaponized," she said, adding that while China has "rational" security concerns, the move is also "a pretext for squeezing out more from Nvidia" by a country that has previously required companies to share their intellectual property. "The Chinese government has already been calling Nvidia in to explain whether its chips are secure, and that's a way to put Nvidia on notice and say, 'Hey, you better be behaving the way we want you to, or else we're going to make it very painful for you to stay in the China market.'" Nvidia has previously said it would not send "any [graphics processing unit] designs to China to be modified to comply with export controls." "Our products are extraordinarily complex and take tens of thousands of engineering years to create, and by the time an NVIDIA product is available in the market, we are already far along in our design of the next one," a spokesperson said Tuesday. Any Chinese advances may mean the deal may only be of short-term value to Nvidia, Tobin argued, but it's one she said the government should shield against. "The role of government is to put the guardrails on so that private interests don't control our national security," Tobin said.

'Bizarre' Nvidia, AMD chip export deal with Trump raises legal questions

Two major chipmakers in the U.S., Nvidia and AMD, have struck an unusual agreement with the federal government to share some of their revenue from chip sales to China -- a deal that experts say raises constitutional questions and may set a concerning new precedent. The two firms have agreed to share 15 percent of the revenue generated from selling advanced artificial intelligence (AI) chips to China in order to secure export licenses after a months-long pause, a U.S. official confirmed to The Hill on Monday. "It's bizarre in many respects and pretty troubling because Congress didn't have anything to say about this," said Gary Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics. "It's just the president's own negotiating with the individual companies," he continued. "That's not how historically we've done business in this country." Under the agreement, Nvidia will share 15 percent of its revenue from H20 chip sales to China, while AMD will share the same portion of its MI308 chip sales. Both the Nvidia and AMD chips in question, which are graphics processing units (GPUs) designed for the Chinese market with U.S. export controls in mind, faced new restrictions from the Trump administration in April, effectively blocking sales to China. Last month, Nvidia and AMD said the U.S. government had assured them it would begin approving export licenses for the H20 and MI308 chips, although the Commerce Department reportedly did not start issuing licenses for several weeks. The new revenue-sharing agreement comes after Nvidia CEO Jensen Huang met with President Trump at the White House last week, according to Bloomberg. Huang has found himself in a tricky situation, balancing Washington and Beijing's interests as both countries vie for AI dominance. "We follow rules the U.S. government sets for our participation in worldwide markets," an Nvidia spokesperson said in a statement. "While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide." "America cannot repeat 5G and lose telecommunication leadership," they added. "America's AI tech stack can be the world's standard if we race." Nvidia dominates the market for GPUs, the chips powering the AI boom, fueling the company's rapid growth over the past few years. It became the first company in the world to reach a market capitalization of $4 trillion last month. AMD holds a much smaller share of the market, although it remains a key player. The agreement appears to remove a major impediment for both companies. Nvidia said earlier this year it incurred $4.5 billion in charges associated with the chip restrictions in the first quarter and expected an $8 billion sales hit in the second quarter. AMD forecast a $1.5 billion hit to revenue this year. The deal represents a notable shift in how the government approaches export controls. "It's quite extraordinary because it turns the export control function of the government into a money-raising proposition, and that's never happened before," Hufbauer said. The U.S. government is barred from imposing taxes on exports under both the Constitution and federal law. "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," Peter Harrell, a nonresident fellow at the Carnegie Endowment for International Peace, wrote in a post on X. "In addition to the Constitution, 50 USC 4815(c) expressly prohibits fees for export control licenses," Harrell, who served as senior director of international economics in the Biden administration, added. It's unclear whether the 15 percent cut from Nvidia and AMD's revenues would count as an export tax because "it looks like the companies just decided to make this payment in order to further their business," Hufbauer noted. It's also not entirely clear who would have standing to challenge the move in court -- an outcome Hufbauer suggested is ultimately unlikely. Even so, the agreements with Nvidia and AMD are likely to face pushback. The Trump administration's decision to allow Nvidia to resume H20 sales to China has already been a source of concern among both Democrats and Republicans, who have warned that it could boost Beijing's AI capabilities. Commerce Secretary Howard Lutnick has argued the administration is only giving China Nvidia's "fourth best" chip. This represents an approach to export restrictions, largely supported by the semiconductor industry, that chipmakers should be allowed to sell some chips to China to prevent its national champion Huawei from gaining ground. However, the administration's latest move creates a new set of concerns. "It raises concerns, certainly for many national security minded folks, of -- are we now selling export control licenses? Is there a way that Nvidia will be able to buy licenses to sell more advanced chips than they're currently able to?" said Owen Tedford, a senior research analyst at Beacon Policy Advisors. Stacy Rasgon, a senior analyst at Bernstein Research, underscored that it makes sense for Nvidia and AMD to take a 15 percent cut because "85 percent is better than nothing." However, he added, "It feels like a little bit of a slippery slope. What's next? Where does it stop? Does it stop with China AI? Does it move to other China stuff that's under export control? In that case, sometimes there's a reason that there's export controls. Can you buy your way out of them? Strategically that's not great." The deals could be a "template" that other companies facing export controls try to follow, Tedford noted. "It's somewhat unique in the way that they only would have happened with Trump as president," he said. "If we'd had a Biden or Harris administration and even if you'd had the same kind of on and off of these H20 chips, this really speaks to Trump's transactional nature, his desire to get some sort of win." "It raises questions about how -- and I think this gets to some of more general concerns with the Trump administration -- just policy feels like it's for sale in some ways, like policy outcomes," Tedford added. "If companies are big enough or strong enough, they can basically buy the policy that they want from the Trump administration."

Chinese State Media Says Nvidia H20 Chips Not Safe for China

BEIJING (Reuters) -Nvidia's H20 chips pose security concerns for China, a social media account affiliated with China's state media said on Sunday, after Beijing raised concerns over backdoor access in those chips. The H20 chips are also not technologically advanced or environmentally friendly, the account, Yuyuan Tantian, which is affiliated with state broadcaster CCTV, said in an article published on WeChat. "When a type of chip is neither environmentally friendly, nor advanced, nor safe, as consumers, we certainly have the option not to buy it," the article concluded. Nvidia did not immediately respond to a request for comment. H20 artificial intelligence chips were developed by Nvidia for the Chinese market after the U.S. imposed export restrictions on advanced AI chips in late 2023. The administration of U.S. President Donald Trump banned their sales in April amid escalating trade tensions with China, but reversed the ban in July. China's cyberspace watchdog said on July 31 that it had summoned Nvidia to a meeting, asking the U.S. chipmaker to explain whether its H20 chips had any backdoor security risks - a hidden method of bypassing normal authentication or security controls. Nvidia later said its products had no "backdoors" that would allow remote access or control. In its article, Yuyuan Tantian said Nvidia chips could achieve functions including "remote shutdown" through a hardware "backdoor." Yuyuan Tantian's comment followed criticism against Nvidia by People's Daily, another Chinese state media outlet. In a commentary earlier this month, People's Daily said Nvidia must produce "convincing security proofs" to eliminate Chinese users' worries over security risks in its chips and regain market trust. (Reporting by Yukun Zhang and Brenda Goh; Editing by Saad Sayeed)

Trump's unusual Nvidia deal raises new corporate and national security risks - The Economic Times

President Trump struck an unprecedented deal allowing Nvidia and AMD to resume AI chip sales to China in exchange for giving the US government 15% of related revenue. Critics call it a dangerous "pay-for-play" precedent undermining export controls, raising legal doubts, and potentially reshaping how strategic technology sales are negotiated.US President Donald Trump upended decades of US national security policy, creating an entirely new category of corporate risk, when he made a deal with Nvidia to give the US government a cut of its sales in exchange for resuming exports of banned AI chips to China. Historically, the US government made decisions to control the export of sensitive technologies on national security grounds. Those decisions were viewed as non-negotiable; if a technology was controlled, companies could not buy their way around those controls, no matter how lucrative the foregone foreign sales. On Monday, Trump raised the prospect of ending that era, saying he would allow Nvidia to sell its H20 chips to China in exchange for the U.S. government receiving a 15% cut of the company's sales of some advanced chips in that country. He made a similar deal with Nvidia's smaller rival AMD. He also told reporters he was open to allowing Nvidia to sell a scaled-down version of its current flagship Blackwell chips to China. Months earlier, his own administration had banned the sale of H20 chips to China, reversing the decision in July as part of what the government said were negotiations on rare earths. The latest move drew condemnation from US lawmakers in both parties who warned that it risked creating a pay-for-play framework for the sale of sensitive technologies to US adversaries, a concern echoed by analysts and legal experts. "Export controls are a frontline defense in protecting our national security, and we should not set a precedent that incentivizes the government to grant licenses to sell China technology that will enhance its AI capabilities," said US Representative John Moolenaar, a Michigan Republican who chairs the House Select Committee on China. Representative Raja Krishnamoorthi of Illinois, the ranking Democrat on the same committee, said that "by putting a price on our security concerns, we signal to China and our allies that American national security principles are negotiable for the right fee." To be sure, the Trump administration has said the national security risks of resuming H20 sales are minimal because the chip was sold widely in China. US Commerce Secretary Howard Lutnick last month described the H20 as Nvidia's "fourth-best chip" in an interview with CNBC. He said it was in U.S. interests for Chinese firms to keep using American technology. Legal? But the deal is extremely rare for the US and marks Trump's latest intervention in corporate decision-making, after pressuring executives to invest in American manufacturing and demanding the resignation of Intel's CEO, Lip-Bu Tan, over his ties to Chinese companies. It is unclear whether Trump's move is legal. The US Constitution prohibits Congress from levying taxes and duties on articles exported from any state. Trade lawyer Jeremy Iloulian said it is hard to tell if this would be considered an "export tax" or some other form of payment without knowing more about the agreement. "Up until today, there has never been a consideration of how much companies need to pay to receive an export license," Iloulian said. Added Kyle Handley, a professor at the University of California San Diego School of Global Policy and Strategy: "It sure looks like an export tax to me ... they can call it whatever they want. It really looks a lot like the government is skimming a little bit off the top." When asked if Nvidia had agreed to pay 15% of revenue to the US, a company spokesperson said, "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," the spokesperson added. A spokesperson for AMD said the US approved its applications to export some AI processors to China but did not directly address the revenue-sharing agreement and said the company's business adheres to all U.S. export controls. ⁠"I think it's fair to say that everything now in this administration seems negotiable in ways that were not the case before," said Sarah Kreps, a professor at the Brooks School of Public Policy at Cornell University. "I don't think this is unique in that this will be the last kind of deal like this that we see." Slippery slope Equities analysts said the levy could hit margins at chipmakers and set a precedent for Washington to tax critical US exports. "It feels like a slippery slope to us," said Bernstein analysts, who expect the deal to cut gross margins on the China-bound processors by 5 to 15 percentage points, shaving about a point from Nvidia and AMD's overall margins. "Naturally, not only chipmakers but also companies selling other strategic products to China will wonder if the remittance model could apply to their industries," said Hendi Susanto, a portfolio manager at Gabelli, which holds shares in Nvidia. "For sellers of strategic products to China, remittance could be a burden - or a lifeline to preserve market access to huge and growing opportunities in China," Susanto said.

Do Nvidia's H20 chips pose security risks? China sounds alarm, orders firms to avoid them

Nvidia H20 chips China: In a significant escalation of its tech self-reliance push, Chinese authorities have quietly issued guidance urging domestic firms to steer clear of Nvidia's H20 chips, especially when used in government-related or national security-related work by state enterprises or private companies, as per a report. The move casts a shadow over Nvidia's hopes to rebound in the Chinese market and raises fresh questions about the role of US-made AI chips in China's digital infrastructure, according to a Reuters report. According to a Bloomberg News report, several companies, both state-owned and private, have received formal notices discouraging the use of H20 chips, Nvidia's less-powerful AI chip created specifically to comply with US export restrictions. ALSO READ: Future foreign minister? Chinese diplomat Liu Jianchao detained in Beijing and taken away for questioning: Reports The notices reportedly underscore concerns about potential security vulnerabilities, aligning with recent coverage in China's state-run media questioning the chip's safety, as per the Reuters report. Officials have also pressured major tech giants like Alibaba and ByteDance to justify their purchases of H20 chips, suggesting they prioritize Chinese alternatives instead, according to the report. The Ministry of Industry and Information Technology has reportedly asked companies to explain why they need to use Nvidia's chips rather than domestically-developed ones, such as those from Huawei, Nvidia's main Chinese rival in the AI chip race, as per the Reuters report. As a result, some firms are reportedly scaling back their orders, according to the report. ALSO READ: Giant Wyoming data center to guzzle 5x more power than residents, but the user remains secret Nvidia issued a statement, saying that the H20 chip was "not a military product or for government infrastructure," as quoted by Reuters. The AI giant also highlighted that "China has ample supply of domestic chips to meet its needs. It won't and never has relied on American chips for government operations, just like the U.S. government would not rely on chips from China," as quoted in the report. The H20 only recently re-entered the Chinese market after Washington eased a ban on its sale in the country, as per the report. It remains the most advanced AI chip Nvidia is currently allowed to sell in China, but its reception has been complicated by growing friction between the two superpowers over tech dominance and national security, according to the Reuters report. The timing of China's move is notable, as it comes just a day after US president Donald Trump suggested he might allow Nvidia to sell a scaled-down version of its new Blackwell chip to China, despite ongoing concerns in Washington that US AI technology could enhance Beijing's military capabilities, as reported by Reuters. The US also recently struck a deal requiring Nvidia and AMD to give the American government 15% of revenue from certain advanced chip sales in China, according to the report. In response, China's foreign ministry asked the US to take practical action to maintain the stability and smooth operation of the global chip supply chain, as reported by Reuters. ALSO READ: 10 must-change iOS 18.6 settings that'll make your iPhone feel like day one again What does this mean for China's chip strategy? It signals a stronger shift toward relying on domestic tech like Huawei's AI chips. Will this impact Nvidia's business in China? Likely yes, as China was once a major market, and restrictions could slow recovery.

Trump's 15% China cut may not worry Nvidia much

A look at balance-sheet math goes a long way to explaining why. In the first quarter, Nvidia said it sold $5.5 billion in products to China, roughly 13% of its total. The chips exposed to the Trump tax accounted for about 80% of that, or just under $5 billion. President Donald Trump's move to extract a 15% sales tax from Nvidia on certain semiconductors sold in China did nothing to damp investor enthusiasm for the world's most valuable company. A look at balance-sheet math goes a long way to explaining why. In the first quarter, Nvidia said it sold $5.5 billion in products to China, roughly 13% of its total. The chips exposed to the Trump tax accounted for about 80% of that, or just under $5 billion. That means the Santa Clara, California-based firm could send some $700 million per quarter to the Treasury-hardly chump change. But for a company that churns out $20 billion in profit a quarter and increases sales by a similar amount-a rate of growth it's sustained throughout the AI boom-paying the tax barely registers. "I don't think it's that big of an issue," said Larry Tentarelli, founder of Blue Chip Daily. "If it was their overall revenue base, it would be a big problem. But because China is not the biggest proportion of their revenues, it's a speed bump." Nvidia shares slipped Monday after the tax was disclosed, then rallied to a fresh record Tuesday in a broad market advance. The chipmaker's shares have doubled since early April, pushing its market value past $4.4 trillion. Similarly, AMD, which agreed to the same tax, closed at the highest in more than a year on Wednesday, bringing year-to-date gains to 53%. Nvidia reports second quarter earnings on Aug. 27. Analysts expect it will report earnings growth of 44% on a 53% surge in revenue to $45.9 billion. That's not to say the clouds have completely lifted in China. It reported this week that Beijing has encouraged local firms to avoid using Nvidia's chips-a move that could limit sales.

Chinese state media says Nvidia H20 chips not safe for China - The Economic Times

The H20 chips are also not technologically advanced or environmentally friendly, the account, Yuyuan Tantian, which is affiliated with state broadcaster CCTV, said in an article published on WeChat.Nvidia's H20 chips pose security concerns for China, a social media account affiliated with China's state media said on Sunday, after Beijing raised concerns over backdoor access in those chips. The H20 chips are also not technologically advanced or environmentally friendly, the account, Yuyuan Tantian, which is affiliated with state broadcaster CCTV, said in an article published on WeChat. "When a type of chip is neither environmentally friendly, nor advanced, nor safe, as consumers, we certainly have the option not to buy it," the article concluded. Nvidia did not immediately respond to a request for comment. H20 artificial intelligence chips were developed by Nvidia for the Chinese market after the US imposed export restrictions on advanced AI chips in late 2023. The administration of US President Donald Trump banned their sales in April amid escalating trade tensions with China, but reversed the ban in July. China's cyberspace watchdog said on July 31 that it had summoned Nvidia to a meeting, asking the US chipmaker to explain whether its H20 chips had any backdoor security risks - a hidden method of bypassing normal authentication or security controls. Nvidia later said its products had no "backdoors" that would allow remote access or control. In its article, Yuyuan Tantian said Nvidia chips could achieve functions including "remote shutdown" through a hardware "backdoor." Yuyuan Tantian's comment followed criticism against Nvidia by People's Daily, another Chinese state media outlet. In a commentary earlier this month, People's Daily said Nvidia must produce "convincing security proofs" to eliminate Chinese users' worries over security risks in its chips and regain market trust.

Chinese state media says Nvidia H20 chips not safe for China

A Chinese state media account has raised security concerns about Nvidia's H20 chips, developed for the Chinese market after U.S. export restrictions. The account, affiliated with CCTV, claims the chips are not technologically advanced, environmentally friendly, or secure, alleging potential backdoor access. This follows previous criticism from People's Daily, demanding security proofs from Nvidia to regain market trust. Nvidia's H20 chips pose security concerns for China, a social media account affiliated with China's state media said on Sunday, after Beijing raised concerns over backdoor access in those chips. The H20 chips are also not technologically advanced or environmentally friendly, the account, Yuyuan Tantian, which is affiliated with state broadcaster CCTV, said in an article published on WeChat. "When a type of chip is neither environmentally friendly, nor advanced, nor safe, as consumers, we certainly have the option not to buy it," the article concluded. Nvidia did not immediately respond to a request for comment. H20 artificial intelligence chips were developed by Nvidia for the Chinese market after the U.S. imposed export restrictions on advanced AI chips in late 2023. The administration of U.S. President Donald Trump banned their sales in April amid escalating trade tensions with China, but reversed the ban in July. China's cyberspace watchdog said on July 31 that it had summoned Nvidia to a meeting, asking the U.S. chipmaker to explain whether its H20 chips had any backdoor security risks - a hidden method of bypassing normal authentication or security controls. Nvidia later said its products had no "backdoors" that would allow remote access or control. In its article, Yuyuan Tantian said Nvidia chips could achieve functions including "remote shutdown" through a hardware "backdoor." Yuyuan Tantian's comment followed criticism against Nvidia by People's Daily, another Chinese state media outlet. In a commentary earlier this month, People's Daily said Nvidia must produce "convincing security proofs" to eliminate Chinese users' worries over security risks in its chips and regain market trust.

Trump Open To Scaled-Down Nvidia Blackwell AI Chip For China: Jensen Huang Is 'Coming To See Me Again About That' - NVIDIA (NASDAQ:NVDA), Advanced Micro Devices (NASDAQ:AMD)

U.S. President Donald Trump has expressed openness to Nvidia Corporation's NVDA proposal to sell a downgraded version of its next-generation Blackwell AI chip to China, with performance reductions of up to 50%, despite concerns over national security. Nvidia Could Get Go Ahead To Sell Blackwell In China, Albeit With Conditions On Monday, President Trump revealed that he may allow Nvidia to sell a scaled-back version of its Blackwell AI chip in China, subject to a significant reduction in computing power, reported Reuters. The adjustment would lower the chip's capabilities by 30-50%, making it a weakened version compared to the original design intended for global markets. "I think he's coming to see me again about that, but that will be an unenhanced version of the big one," Trump told reporters, referring to Nvidia CEO Jensen Huang. However, Trump was clear about the need to keep U.S. interests in mind, stating that the chips' capabilities would need to be significantly downgraded to avoid boosting China's AI capabilities. He added that the modified version would be an "enhanced-in-a-negative-way" Blackwell chip, signaling a compromise between economic interests and national security concerns. The suggestion comes amid ongoing discussions between Nvidia and the Trump administration, which is evaluating the national security implications of China gaining access to cutting-edge AI technology. See Also: AMD CEO Lisa Su Says China Strategy Rebounding As MI308 AI Chips Await US License: 'Better Position Than We Were Ninety Days Ago' Is Nvidia Working On A Lower Grade Blackwell Chip For China? In May, it was reported that Nvidia was working on a new, lower-cost version of its latest Blackwell AI chips tailored for the Chinese market. The company has not confirmed the chip's development or revealed how its performance compares to its U.S. counterparts. The U.S. flagship Blackwell chip, introduced in March, is capable of running up to 30 times faster than its previous generation. China continues to be a key market for Nvidia, contributing 13% of the company's revenue in the last fiscal year. Trump Defends Revenue-Sharing Deal With Nvidia, AMD Over China Chip Sales On the same day, Trump also defended the rare revenue-sharing agreement that requires Nvidia and Advanced Micro Devices, Inc. AMD to hand over 15% of their China sales to the U.S. government. The arrangement follows his administration's decision last month to approve exports to China of Nvidia's less advanced H20 AI chips, despite an earlier ban in April. "The H20 is obsolete," Trump said, stating that China already had access to it. "So I said, 'Listen, I want 20% if I'm going to approve this for you, for the country.'" The final deal was settled at 15%. Meanwhile, China's foreign ministry reiterated its opposition to U.S. technology and trade restrictions, accusing Washington of trying to "maliciously contain and suppress" the country's development, the report added. Price Action: On Monday, Nvidia's stock dipped 0.32%, followed by a further 0.038% drop in after-hours trading, reaching $182.08 at the time of writing, according to Benzinga Pro. Benzinga's Edge Stock Rankings show that NVDA continues to exhibit a solid upward trend across short, medium and long-term periods. Further performance insights can be found here. Read Next: July's 20 Most-Searched Tickers On Benzinga Pro -- Where Do Opendoor, Nvidia, Apple Stock Rank? Photo Courtesy: noamgalai on Shutterstock.com Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. AMDAdvanced Micro Devices Inc$172.71-0.03%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum89.08Growth91.43Quality78.80Value11.40Price TrendShortMediumLongOverviewNVDANVIDIA Corp$182.08-0.34%Market News and Data brought to you by Benzinga APIs

China Raises Security Red Flags Over Nvidia's H20 Chips As Trump Pushes For 15% Revenue Share: Report - NVIDIA (NASDAQ:NVDA), Advanced Micro Devices (NASDAQ:AMD)

China has reportedly raised security concerns about Nvidia Corp.'s NVDA H20 chips, especially regarding potential backdoor risks, while the U.S. government, spearheaded by Donald Trump, pushes for a 15% revenue share from sales to China as part of its deal with the chipmaker. China Warns Firms Off Nvidia H20 Chips, Threatening US Sales Push In the past few weeks, China has told domestic companies to avoid Nvidia's H20 processors, especially for government projects, reported Bloomberg, citing people familiar with the matter. The authorities have sent notices to companies discouraging the use of H20 chips in state enterprises or sensitive projects. As per the report, Advanced Micro Devices, Inc. AMD is also impacted by this development, although it's unclear if its MI308 chip was named. Earlier on Sunday, it was reported that the state-run media outlet Yuyuan Tantian, linked to China's CCTV, criticized the H20 chips, saying they are environmentally unfriendly and possibly unsafe for use in critical sectors. See Also: AMC CEO Says He Has Personally Abandoned Google In Exchange For ChatGPT: Here's How The Company Is Using Artificial Intelligence Security Concerns Over Nvidia Chips Some notices questioned why firms buy Nvidia chips over domestic alternatives and whether they found security flaws, the report added, citing one of the sources. State media has also cast doubt on the H20's reliability. Regulators raised similar issues with Nvidia, which insists the chips are secure and not for military or government infrastructure. In a statement to the publication, Nvidia stated that the "H20 is not a military product or for government infrastructure." The company spokesperson added that China has plenty of domestic chips and has never depended on American processors for government operations. Trump Administration to Get 15% Of Sales Revenue From China Both Nvidia and AMD have reportedly gotten U.S. approval to sell lower-end AI chips to China, on the condition that they give Washington 15% of sales. Earlier, analysts expected Nvidia's share of China's AI chip market to drop in 2025, driven by the rapid expansion of domestic rivals like Huawei Technologies and Cambricon and the effects of U.S. sanctions. Meanwhile, Trump has signaled he is open to Nvidia's plan to offer China a scaled-down version of its upcoming Blackwell AI chip, albeit with performance cut by as much as 50%. Price Action: On Monday, Nvidia shares fell 0.32%, followed by a 0.27% drop in pre-market trading on Tuesday, according to Benzinga Pro. Benzinga's Edge Stock Rankings show that NVDA has maintained an upward trend over the short, medium and long term. Additional performance insights are available here. Read Next: AMD CEO Lisa Su Says China Strategy Rebounding As MI308 AI Chips Await US License: 'Better Position Than We Were Ninety Days Ago' Photo Courtesy: Shutterstock AMDAdvanced Micro Devices Inc$172.740.27%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum89.08Growth91.43Quality78.80Value11.40Price TrendShortMediumLongOverviewNVDANVIDIA Corp$181.57-0.27%Market News and Data brought to you by Benzinga APIs

NVIDIA Faces Another Headache As Chinese Government Asks Local Firms To Not Use The H20 AI GPUs Cleared By US Government

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy. After news broke of the Trump administration levying a 15% commission on NVIDIA and AMD's chip sales to China, sources quoted by Bloomberg claim that the Chinese government is growing anxious about using American AI chips, particularly for security and government work. NVIDIA and AMD have started to receive their AI GPU chip export licenses, and due to its dominance in the AI chip industry, NVIDIA has come under scrutiny by China for potential backdoors and tracking software in its products. While the firm has denied these claims, the fear of relying on foreign AI chips appears to be stimulating the Chinese government's opposition to foreign-sourced AI hardware. Today's report follows earlier news last month, which outlined that Chinese cybersecurity officials were investigating NVIDIA's H20 AI chips for potential backdoors and location tracking mechanisms. While NVIDIA only recently started receiving licenses to sell the H20 GPUs in China, the earlier restrictions levied on the sales by the Trump administration generated hefty speculation about the chips making their way to the country via other nations such as Singapore and Malaysia. Consequently, speculation grew about the Trump administration asking NVIDIA to include location tracking in its chips to ascertain their final destination reliably. However, NVIDIA has vehemently denied that any backdoors or tracking mechanisms are present in its chips as it aims to resume its Chinese sales after receiving US export licenses earlier this month. However, despite NVIDIA's assurances, it appears that Chinese authorities continue to remain skeptical about the firm's chips. According to Bloomberg, the authorities have sent letters to several Chinese firms to urge them not to rely on NVIDIA's H20 AI GPUs, especially when it came to government or national security applications. The publication's sources add that while AMD's AI accelerators are also part of the government's concerns, it is unclear whether they involve a broader set of AMD's chips or the MI308 accelerators. Not only is the Chinese government concerned about the security implications of using foreign-source AI chips, but it is also fearful of stymying the domestic AI chip industry. The Chinese government wants local firms to rely on domestic AI chips, and as a result, it is encouraging them to shun NVIDIA's products. China's leading-edge AI chips are developed by Huawei, but due to US sanctions on chip manufacturing, they lag behind NVIDIA's products in terms of performance. Additionally, NVIDIA's CUDA software for using its chips is also ahead of Huawei's offerings. While the Trump administration initially banned H20 sales to China, it reversed course later on after heeding to NVIDIA CEO Jensen Huang's argument of ensuring US dominance across the global AI industry. Officials argue that it serves US interests to have China use American chips to stifle any revenue that could be diverted to Huawei and aid it in developing advanced chips.

Chinese Big Tech Has Reportedly Been Ordered by the Government to Suspend Purchases of NVIDIA's H20 AI Chips, Creating Massive Uncertainty for Jensen and His China Ambitions

NVIDIA's H20 AI chips have reportedly been barred from being purchased by AI tech giants from China, amid reports of security backdoors that are concerning Beijing. Well, things aren't turning out how they should for NVIDIA's business in China right now. After Jensen struggles to get the green light from the Trump administration to sell its chips to China, it seems like the Chinese government is creating new hurdles for Team Green. In a report by The Information, it is revealed that major Chinese tech giants, such as ByteDance, Alibaba, and Tencent, are ordered by China's authorities to suspend their purchases of the H20 AI chip, citing security concerns. Interestingly, a similar report was discussed a few hours ago, but it was perceived that the scope was limited to 'guidance' by the Chinese regulators, and it wouldn't lead to a halt in purchases. However, the newer report claims that China's AI companies are required to suspend their orders of the H20 AI chip, which would create massive troubles for NVIDIA and Chinese companies in desperate need of computing power right now. For those still unaware of why China is demanding local AI firms give up their pursuit of the H20 chip, the domestic administration is concerned about potential security backdoors that lead back to Washington. These include a location tracking mechanism and a 'kill switch' in case the end user doesn't come into America's good books. NVIDIA has denied the existence of such backdoors, claiming that it would never happen, but despite their claims, it seems like China still isn't satisfied. One crucial point is that President Trump's "AI Action" plan has a detailed section stating that all chips exported to China will have some backdoor, whether NVIDIA likes itor not. China had been fond of the H20 AI chip before the initial export controls came in, so the sudden change in stance does show that the domestic regulators are skeptical about the flow of the newer chips into the region.

Trump's deal with Nvidia offers path forward in global trade war

U.S. President Donald Trump's controversial plan to take a cut of revenue from chip sales to China has U.S. companies reconsidering their plans for business with the country, offering a model for circumventing years of trade tensions. Experts and people familiar with the matter said the surprise deal, in which Nvidia and Advanced Micro Devices agreed to pay 15% of their revenues from Chinese artificial intelligence chip sales to the U.S., provides a path to enter the Chinese market despite severe export controls, tariffs and other trade barriers. The question that companies must now confront is whether the risk is worth taking. People familiar with the matter, who asked not to be identified discussing private deliberations, said companies are struggling to figure out what the president's order means for their future, especially given the unpredictable nature of Trump's decision-making.

China Still Isn't Ready to Bet on H20 AI Chips Amid Ongoing State Media Concerns Over Security & Hardware Backdoors Despite NVIDIA's Assurances

NVIDIA's H20 AI chips won't be easy to get into Chinese AI markets, as the local state media is voicing opposition against the move, citing potential backdoors. NVIDIA's H20 AI Chips Aren't "Advanced or Environmentally Friendly", Says State Media Broadcaster Team Green spent a lengthy time pursuing approval for its AI chips to flow into China, and after lobbying the Trump administration, Jensen did get the green light a few weeks ago. However, things have started to take a turn after a Chinese regulator opened an investigation into the H20 AI chips to identify security flaws that could return to Washington. Now, Reuters reports that Chinese state media CCTV broadcaster claims that the H20 chip isn't safe for the domestic AI markets, as it comes with several backdoors. When a type of chip is neither environmentally friendly, nor advanced, nor safe, as consumers, we certainly have the option not to buy it. -Reuters This isn't the only occasion where China has opposed the flow of H20 AI chips, as the nation's cyberspace watchdog recently called out NVIDIA to investigate potential backdoors, including chip surveillance and a 'kill switch'. In response to the claims, NVIDIA was quick enough to push out a blog post, claiming that they would never integrate such mechanisms in their chips, but despite the company's assurances, it seems like the Chinese media is still skeptical. It is important to note that the Trump administration hasn't ruled out implementing backdoors or similar mechanisms in AI chips going to the likes of China. Interestingly, this move is actually a part of the government's 'AI action' plan, which we have discussed in depth previously, hence ruling out the existence of the 'so-called' backdoors isn't entirely possible for now. However, with the existing H20 AI chips, NVIDIA says there's no chance of such measures being onboarded. NVIDIA needs to take Chinese AI markets into account if they are eager to sell the massive chunk of inventory they have onboard, and while the firm's PR machine is actively working to address the claims, it seems like the domestic media still doesn't believe in NVIDIA's statements.

Nvidia Says There Are No 'Backdoors' In Its Chips As Beijing Demands Answers: 'No Kill Switches, No Spyware' - NVIDIA (NASDAQ:NVDA)

Nvidia Corp. NVDA issued a forceful denial days after China's cyberspace regulator summoned the company over alleged "tracking and positioning" risks in H20 AI chips newly cleared for some exports, calling hidden controls nonexistent and dangerous. What Happened: "There are no back doors in Nvidia chips. No kill switches. No spyware. That's not how trustworthy systems are built -- and never will be," wrote Chief Security Officer David Reber Jr. in a blog post penned last week. Reber argued that any secret access to remotely disable hardware or spy on usage would inevitably be turned against its creator. "There is no such thing as a 'good' secret backdoor -- only dangerous vulnerabilities that need to be eliminated," he wrote, adding that hard-coded, single-point controls would be "a gift to hackers and hostile actors." Why It Matters: The post followed a partial U.S. rollback of export curbs on Nvidia's H20 accelerators to China and Beijing's ensuing scrutiny. China's Cyberspace Administration asked the chipmaker to explain potential "back doors," while U.S. officials simultaneously examined ways to better track where advanced accelerators end up. See Also: Trump Wanted Intel CEO Out, Now Lip-Bu Tan Is Heading To The White House On Monday: Report Policy debates in Washington are sharpening. A 'Chip Security Act' under discussion would embed location verification for export-controlled AI chips and some high-end consumer GPUs. Rep. Bill Huizenga (R-Mich.), a sponsor, told the Washington Post the measure wouldn't require "spyware" or "kill switches," calling claims to the contrary "disingenuous." Trending Investment OpportunitiesAdvertisementArrivedBuy shares of homes and vacation rentals for as little as $100. Get StartedWiserAdvisorGet matched with a trusted, local financial advisor for free.Get StartedPoint.comTap into your home's equity to consolidate debt or fund a renovation.Get StartedRobinhoodMove your 401k to Robinhood and get a 3% match on deposits.Get Started Enforcement pressure is rising, too. The Justice Department last week charged two Chinese nationals with allegedly smuggling tens of millions of dollars' worth of restricted GPUs to China through third countries. Price Action: Nvidia stock closed higher by 1.06% to $182.74 on Friday. According to Benzinga's Edge Stock Rankings, Nvidia continues to exhibit strong upward momentum across short, medium and long-term timeframes. Additional performance metrics can be found here. Photo Courtesy: Saulo Ferreira Angelo on Shutterstock.com Read Next: Mark Cuban's Life Hack: 'If You Were Miserable When You Were Poor You Will Just As Miserable If You Are Rich -- It Is Money, Not A Puppy' NVDANVIDIA Corp$182.831.14%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum92.25Growth99.14QualityN/AValue6.20Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

Nvidia's H20 Chips Under Fire In China Over Security Fears As US Export Deal Sparks Backlash: Report - NVIDIA (NASDAQ:NVDA)

Nvidia Corporation's NVDA H20 artificial intelligence chips are facing mounting security concerns in China, with state media and regulators raising alarms about potential backdoor risks while the U.S. government secures revenue-sharing deals with the chipmaker for export licenses. China Raises Security Concerns Over H20 Chips Nvidia's H20 chips have come under fire in China, with state media and the Cyberspace Administration of China raising alarms about potential security risks, including the possibility of "backdoor" features that could bypass authentication and allow remote access. On Sunday, an article by Yuyuan Tantian, a social media account linked to state broadcaster CCTV, alleged that Nvidia's H20 chips are not only environmentally unfriendly but also potentially unsafe for Chinese consumers, reported Reuters. In the article, Yuyuan Tantian criticized the chips, saying, "When a type of chip is neither environmentally friendly, nor advanced, nor safe, as consumers, we certainly have the option not to buy it." See Also: Mark Cuban's Life Hack: 'If You Were Miserable When You Were Poor You Will Just As Miserable If You Are Rich -- It Is Money, Not A Puppy' This article followed earlier criticism by the People's Daily, which called on Nvidia to provide "convincing security proofs" to alleviate concerns over the safety of its chips. Nvidia has vehemently denied the allegations, stating that its products contain no "backdoors" and are built to comply with U.S. regulations. A company spokesperson reiterated that the chips are designed to meet export control laws and that the company has taken steps to ensure security in its products. The US-China Geopolitical Tension And Nvidia's Strategy Nvidia designed the H20 chip specifically for the Chinese market after the U.S. imposed export restrictions on more advanced AI chips in 2023. However, in a reversal of the original ban, the Donald Trump administration allowed Nvidia to resume sales of the H20 chips to China in July 2025, provided the company adhered to certain conditions. These conditions reportedly included Nvidia agreeing to pay 15% of its revenues from chip sales in China to the U.S. government in exchange for the export licenses. Competition And Regulatory Scrutiny Faced By Nvidia Despite the U.S. policy reversal, Nvidia faces increased competition from domestic Chinese chipmakers like Huawei Technologies, Cambricon and Hygon. Analysts predict that Nvidia's share of China's AI chip market will decline in 2025 as local companies aggressively expand. Price Action: Over the last five days, Nvidia's stock has climbed 4.30%, bringing its year-to-date gain to 32.12%, according to Benzinga Pro. Benzinga's Edge Stock Rankings show that NVDA continues to demonstrate a strong upward trend across short, medium and long-term periods, with more detailed performance metrics available here. Read Next: AMD CEO Lisa Su Says China Strategy Rebounding As MI308 AI Chips Await US License: 'Better Position Than We Were Ninety Days Ago' Photo by gguy via Shutterstock Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. NVDANVIDIA Corp$182.831.14%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum91.81Growth99.18QualityN/AValue6.04Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

Trump Allows AI Chips Export to China With 15% Revenue Share

MediaNama's Take: The US President Donald Trump allowing Nvidia and AMD to export AI chips to China for a 15% revenue share seems more like an agreement that functions purely on numbers and monetary gains rather than a national security issue. It is not clear how the threat of China outpacing the US within the AI domain gets eliminated if the Trump administration charges essentially what is an 'export tax' for AI chips shipped to the East Asian country. Trump has essentially moulded a national security issue into a toll booth where chipmakers can pay up to get security clearances for export licenses. Security experts succinctly summed up this dichotomy in a letter to Trump, saying, "This is not a question of trade. It is a question of national security." India must watch carefully, as Trump might place an embargo on chip exports to India after loosening the guardrails for China. His decision-making ability is inconsistent at best, demonstrated by China getting a 90-day tariff relief, while Trump recently hammered India with 50% tariffs for buying Russian oil. The US President's upcoming meeting with Russian President Vladimir Putin might offer hope to India, but that can only happen if the two world leaders reach consensus on various issues, including the Ukraine war. Chip-making giants Nvidia and AMD have agreed to pay 15% of the revenue generated from their AI chip sales in China to the Trump administration in the US, as per an Associated Press report. This comes at a time when Trump had imposed a 100% tariff on imported semiconductors, leading to tech giants like Apple announcing investments in the US. For context, the US government had halted chip sales to China in April this year due to looming national security concerns. However, both Nvidia and AMD stated in July that the Trump administration permitted them to sell chips that are used in artificial intelligence (AI) development in China. In response, security experts - including some who worked within the first Trump administration - wrote to the US President, expressing deep concern, saying that Nvidia's H20 chip was "a potent accelerator of China's frontier AI capabilities, not an outdated AI chip." "Designed specifically to work around export control thresholds, the H20 is optimised for inference, the process responsible for the dramatic capabilities gains made by the latest generation of frontier AI reasoning models," the experts wrote. Trump confirmed the extraordinary terms of the agreement on Monday, noting that he originally wanted 20% of the sales revenue. As per the present agreement, Nvidia is liable to pay 15% revenue on its H20 chip sales in China, while AMD is liable to pay the same percentage on its MI308 chip sales in the East Asian country. This unusual revenue-sharing arrangement with the US Government has elicited surprise and concern in the North American country, with critics raising concerns about Trump's approach to dealing with private businesses. One financial expert called this latest move a 'shakedown' on X (formerly Twitter), pointing out that taxing exports from the US is unconstitutional. US Congressman Raja Krishnamoorthi, who is the Ranking Member of the Select Committee on Strategic Competition Between the US and the Chinese Communist Party, said that the Trump administration must not gamble with national security issues in lieu of a revenue share. "Our export control regime must be based on genuine security considerations, not creative taxation schemes disguised as national security policy," Krishnamoorthi said. "Chip export controls aren't bargaining chips, and they're not casino chips either. We shouldn't be gambling with our national security to raise revenue," he added. Elsewhere, Deborah Elms, who is a trade and economic policy expert based in Singapore, raised a legitimate point about the essential nature of a national security threat (in this case, the AI growth/development in China). She said, "You either have a national security problem or you don't. If you have a 15% payment, it doesn't somehow eliminate the national security issue." The Trump administration rescinded the Joe Biden-era AI diffusion rule in May this year. The rule placed nations into three categories and proposed limits on the number of AI chips that a particular country could import, even if they were not geopolitical rivals of the US. The US placed India in Group 2, which meant that the US only permitted 1,700 chips to India each year. Notably, the US placed China in Group 3 alongside Russia and Iran, among others. This meant the US completely prohibited chip exports to China. However, now Trump has apparently softened his stance against China by allowing Nvidia and AMD to export chips to China for a pre-determined fee, and even delaying tariff measures against the East Asian country by 90 days. Conversely, he has cracked down on India with 50% tariffs on Indian imports in the US. This is the highest tariff percentage alongside Brazil, and the US mandated this for India buying crude oil from Russia. Going by Trump's recent policy actions against India, one cannot rule out the 79-year-old placing a complete embargo on American tech companies exporting AI chips to the South Asian country. However, the US President will be meeting his Russian counterpart, Putin, in the US state of Alaska on August 15 to potentially broker a ceasefire between Russia and Ukraine that might involve the latter ceding territory to the former. If Trump and Putin can find common ground in Alaska, Indians can hope for the US President to soften his stance on India, remove the excessive tariff rates, and even encourage AI chip exports from the US. But until then, India must wait and watch with bated breath the US President's erratic and reckless decision-making, both with respect to American and international matters.

Trump's unusual Nvidia deal raises new corporate and national security risks, lawmakers and experts say

U.S. President Donald Trump upended decades of U.S. national security policy, creating an entirely new category of corporate risk, when he made a deal with Nvidia to give the U.S. government a cut of its sales in exchange for resuming exports of banned AI chips to China. Historically, the U.S. government made decisions to control the export of sensitive technologies on national security grounds. Those decisions were viewed as non-negotiable; if a technology was controlled, companies could not buy their way around those controls, no matter how lucrative the foregone foreign sales. On Monday, Trump raised the prospect of ending that era, saying he would allow Nvidia to sell its H20 chips to China in exchange for the U.S. government receiving a 15 per cent cut of the company's sales of some advanced chips in that country. He made a similar deal with Nvidia's smaller rival AMD. He also told reporters he was open to allowing Nvidia to sell a scaled-down version of its current flagship Blackwell chips to China. Months earlier, his own administration had banned the sale of H20 chips to China, reversing the decision in July as part of what the government said were negotiations on rare earths. The latest move drew condemnation from U.S. lawmakers in both parties who warned that it risked creating a pay-for-play framework for the sale of sensitive technologies to U.S. adversaries, a concern echoed by analysts and legal experts. "Export controls are a frontline defense in protecting our national security, and we should not set a precedent that incentivizes the government to grant licenses to sell China technology that will enhance its AI capabilities," said U.S. Representative John Moolenaar, a Michigan Republican who chairs the House Select Committee on China. Representative Raja Krishnamoorthi of Illinois, the ranking Democrat on the same committee, said that "by putting a price on our security concerns, we signal to China and our allies that American national security principles are negotiable for the right fee." To be sure, the Trump administration has said the national security risks of resuming H20 sales are minimal because the chip was sold widely in China. U.S. Commerce Secretary Howard Lutnick last month described the H20 as Nvidia's "fourth-best chip" in an interview with CNBC. He said it was in U.S. interests for Chinese firms to keep using American technology. Legal? But the deal is extremely rare for the U.S. and marks Trump's latest intervention in corporate decision-making, after pressuring executives to invest in American manufacturing and demanding the resignation of Intel's CEO, Lip-Bu Tan, over his ties to Chinese companies. It is unclear whether Trump's move is legal. The U.S. Constitution prohibits Congress from levying taxes and duties on articles exported from any state. Trade lawyer Jeremy Iloulian said it is hard to tell if this would be considered an "export tax" or some other form of payment without knowing more about the agreement. "Up until today, there has never been a consideration of how much companies need to pay to receive an export license," Iloulian said. Added Kyle Handley, a professor at the University of California San Diego School of Global Policy and Strategy: "It sure looks like an export tax to me ... they can call it whatever they want. It really looks a lot like the government is skimming a little bit off the top." When asked if Nvidia had agreed to pay 15 per cent of revenue to the U.S., a company spokesperson said, "We follow rules the U.S. 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," the spokesperson added. A spokesperson for AMD said the U.S. approved its applications to export some AI processors to China but did not directly address the revenue-sharing agreement and said the company's business adheres to all U.S. export controls. ⁠"I think it's fair to say that everything now in this administration seems negotiable in ways that were not the case before," said Sarah Kreps, a professor at the Brooks School of Public Policy at Cornell University. "I don't think this is unique in that this will be the last kind of deal like this that we see." 'Slippery slope' Equities analysts said the levy could hit margins at chipmakers and set a precedent for Washington to tax critical U.S. exports. "It feels like a slippery slope to us," said Bernstein analysts, who expect the deal to cut gross margins on the China-bound processors by five to 15 percentage points, shaving about a point from Nvidia and AMD's overall margins. "Naturally, not only chipmakers but also companies selling other strategic products to China will wonder if the remittance model could apply to their industries," said Hendi Susanto, a portfolio manager at Gabelli, which holds shares in Nvidia. "For sellers of strategic products to China, remittance could be a burden - or a lifeline to preserve market access to huge and growing opportunities in China," Susanto said.

Chinese state media says Nvidia H20 chips not safe for China

Nvidia's H20 chips pose security concerns for China, a social media account affiliated with China's state media said on Sunday, after Beijing raised concerns over backdoor access in those chips. The H20 chips are also not technologically advanced or environmentally friendly, the account, Yuyuan Tantian, which is affiliated with state broadcaster CCTV, said in an article published on WeChat. "When a type of chip is neither environmentally friendly, nor advanced, nor safe, as consumers, we certainly have the option not to buy it," the article concluded. Nvidia did not immediately respond to a request for comment. H20 artificial intelligence chips were developed by Nvidia for the Chinese market after the U.S. imposed export restrictions on advanced AI chips in late 2023. The administration of President Trump banned their sales in April amid escalating trade tensions with China, but reversed the ban in July. China's cyberspace watchdog said on July 31 that it had summoned Nvidia to a meeting, asking the chipmaker to explain whether its H20 chips had any backdoor security risks -- a hidden method of bypassing normal authentication or security controls. Nvidia later said its products had no "backdoors" that would allow remote access or control. In its article, Yuyuan Tantian said Nvidia chips could achieve functions including "remote shutdown" through a hardware "backdoor." Yuyuan Tantian's comment followed criticism against Nvidia by People's Daily, another Chinese state media outlet. In a commentary earlier this month, People's Daily said Nvidia must produce "convincing security proofs" to eliminate Chinese users' worries over security risks in its chips and regain market trust.

Trump's Nvidia, AMD China Export Deal Risks Market Stability | Investing.com UK

The recent deal between Nvidia (NASDAQ:NVDA), AMD (NASDAQ:AMD), and the US government marks an alarming shift in how trade policy is being conducted. Under the agreement, the two semiconductor giants will hand over 15% of their China AI chip revenues in exchange for export licences. This arrangement, which covers Nvidia's H20 and AMD's MI308 chips - both redesigned for the Chinese market after earlier restrictions - risks recasting export controls as financial transactions rather than as national security safeguards. Never before in US history has access to export licences been monetised in this way. The move follows a meeting between Nvidia CEO Jensen Huang and President Donald Trump, after which the Commerce Department's Bureau of Industry and Security began issuing licences just two days later. On the surface, it may appear like a pragmatic compromise: US companies keep selling, the government collects billions, and China gets access to high-end chips. In reality, it is a precedent that could destabilise the foundations of global trade. For Nvidia, the stakes are enormous. The company could sell 1.5 million H20 chips in China in 2025 alone, generating about $23 billion. AMD's dependence on China as a growth driver is also significant - the market accounted for roughly a quarter of its total revenue last year. The new 15% levy will channel vast sums into the US Treasury. But the cost is far greater than the financials suggest. Export controls are supposed to be grounded in clear, consistent, technical criteria that protect national security. The moment they are converted into revenue-sharing schemes, their purpose changes entirely. They stop being predictable safeguards and start becoming bargaining chips. This sends a destabilizing message to global markets and erodes trust between trading partners. This deal is not a one-off anomaly. It could serve as a template. If the US - the world's largest economy - can auction off export permissions, other governments will notice and follow suit. We could see market access become a matter of political leverage and financial willingness rather than rules-based governance. That is exactly the opposite of what global business needs to function effectively. The policy's origins are telling. The Trump administration moved in April to ban Nvidia's H20 outright. That ban was reversed in June, but licences were withheld until this new agreement emerged. Some in the US security community still argue that these chips could enhance China's AI capabilities in ways that indirectly benefit its military. Others claim the deal is a win-win: keeping US companies competitive in China while generating funds for national priorities. But blending these objectives corrodes the credibility of trade policy. When market rules can be bent for a price, they lose legitimacy - both at home and abroad. Allies begin to question the consistency of US commitments. Investors start factoring in new forms of political risk. As such, adversaries gain a ready-made excuse to introduce their own revenue-linked restrictions. If this approach spreads, international supply chains will become less predictable. Companies will face higher costs, be forced to build costly redundancies, and potentially accelerate the relocation of investment and R&D away from the US. Predictability is the cornerstone of investor confidence. When policy becomes negotiable for a fee, companies will act defensively - shifting production, diversifying export markets, and limiting exposure to the US regulatory sphere. Businesses thrive on certainty, not transactional unpredictability. Once licensing is turned into a commodity, it is nearly impossible to reverse. This is not just about semiconductors, China, or one administration's trade strategy. It's about whether the US - and by extension the global trading system - can uphold transparent, rules-based trade. Without that, trust will unravel, and markets will inevitably adjust - in ways that could harm competitiveness, innovation, and stability for years to come.

China urges firms not to use Nvidia's H20 chips, Bloomberg News reports

(Reuters) -Chinese authorities have urged local companies to avoid using Nvidia's H20 processors, particularly for government-related purposes, Bloomberg News reported on Tuesday, citing people familiar with the matter. Authorities have sent notices to a range of firms discouraging use of the less-advanced semiconductors, with the guidance taking a particularly strong stance against the use of Nvidia's H20s for any government or national security-related work by state enterprises or private companies, the report said. Reuters could not immediately confirm the report. Nvidia did not immediately respond to a request for comment outside regular business hours. Nvidia said in July that its products have no "backdoors" that would allow remote access or control after China raised concerns over potential security risks in the firm's H20 artificial intelligence chip. U.S. President Donald Trump suggested on Monday that he might allow Nvidia to sell a scaled-down version of its next-generation advanced GPU chip in China, despite deep-seated fears in Washington that China could harness U.S. artificial intelligence capabilities to supercharge its military. The move could open the door to China securing more advanced computing power from the U.S. even as the two countries battled for technology supremacy, critics said. (Reporting by Ananya Palyekar in Bengaluru; Editing by Tom Hogue and Kim Coghill)

China urges local firms not to use Nvidia's H20 chips, Bloomberg News reports

(Reuters) -Chinese authorities have urged local companies to avoid using Nvidia's H20 chips, particularly for government-related purposes, Bloomberg News reported on Tuesday, a move likely to hamper the firm's efforts to revive its slumping China sales. A range of firms were sent official notices discouraging the use of the H20, a less-advanced chip, particularly for any government or national security-related work by state enterprises or private companies, the report said, citing people familiar with the matter. Reuters could not immediately confirm the report. Nvidia said in a statement on Tuesday that the H20 chip was "not a military product or for government infrastructure." "China has ample supply of domestic chips to meet its needs. It won't and never has relied on American chips for government operations, just like the U.S. government would not rely on chips from China," the statement said Washington last month lifted a ban on the sale of the H20 chip in China and it is now the most advanced artificial intelligence chip that Nvidia is allowed to sell there. The move comes after reports in China's state media of security concerns around H20 chips. Nvidia has said there are no "backdoors" that would allow remote access or control. Beijing is pressuring China's large tech firms such as Alibaba and ByteDance over orders of H20 chips, the Financial Times reported on Tuesday. The companies have been asked by the Ministry of Industry and Information Technology to explain why they need to order H20 chips instead of using domestic alternatives, the report said, citing people familiar with the matter. Some tech companies were planning to reduce their orders as a result of the questions from regulators, the report said. Alibaba and ByteDance did not immediately respond to Reuters requests for comments. China is also trying to promote the use of domestically-developed technologies including AI chips made by Huawei, the Chinese rival with which Nvidia is battling for AI chip dominance. Shares in China's top contract chipmaker SMIC rose 5% on Tuesday on expectations of rising demand for locally-produced chips. The H20 curb also follows comments on Monday from U.S. President Donald Trump, suggesting that he might allow Nvidia to sell a scaled-down version of its advanced Blackwell chip in China, despite deep-seated fears in Washington that Beijing could harness U.S. AI capabilities to supercharge its military. China's foreign ministry said on Tuesday it hoped the U.S. would take practical action to maintain the stability and smooth operation of the global chip supply chain. The Trump administration last week confirmed an unprecedented deal with Nvidia and AMD to give the U.S. government 15% of revenue from sales of some advanced chips in China. China's renewed guidance on avoiding chips also affects AI accelerators from Advanced Micro Devices, the Bloomberg report said, adding that it was unclear whether any notices from Chinese authorities specifically mentioned AMD's MI308 chip. AMD did not respond to a request for comment outside regular business hours. (Reporting by Ananya Palyekar and Surbhi Misra in Bengaluru and Brenda Goh in Shanghai; Editing by Saad Sayeed, Miyoung Kim and Kate Mayberry)

Chinese state media says Nvidia H20 chips not safe for China

BEIJING (Reuters) -Nvidia's H20 chips pose security concerns for China, a social media account affiliated with China's state media said on Sunday, after Beijing raised concerns over backdoor access in those chips. The H20 chips are also not technologically advanced or environmentally friendly, the account, Yuyuan Tantian, which is affiliated with state broadcaster CCTV, said in an article published on WeChat. "When a type of chip is neither environmentally friendly, nor advanced, nor safe, as consumers, we certainly have the option not to buy it," the article concluded. Nvidia did not immediately respond to a request for comment. H20 artificial intelligence chips were developed by Nvidia for the Chinese market after the U.S. imposed export restrictions on advanced AI chips in late 2023. The administration of U.S. President Donald Trump banned their sales in April amid escalating trade tensions with China, but reversed the ban in July. China's cyberspace watchdog said on July 31 that it had summoned Nvidia to a meeting, asking the U.S. chipmaker to explain whether its H20 chips had any backdoor security risks - a hidden method of bypassing normal authentication or security controls. Nvidia later said its products had no "backdoors" that would allow remote access or control. In its article, Yuyuan Tantian said Nvidia chips could achieve functions including "remote shutdown" through a hardware "backdoor." Yuyuan Tantian's comment followed criticism against Nvidia by People's Daily, another Chinese state media outlet. In a commentary earlier this month, People's Daily said Nvidia must produce "convincing security proofs" to eliminate Chinese users' worries over security risks in its chips and regain market trust. (Reporting by Yukun Zhang and Brenda Goh; Editing by Saad Sayeed)