45 Sources
[1]
US demands cut of Nvidia sales in order to ship AI chips to China
The Trump administration has ordered Nvidia and AMD to pay the federal government a 15 percent cut of their AI chip sales revenue to China, according to reports from The New York Times and The Financial Times. Nvidia CEO Jensen Huang reportedly reached an agreement with President Donald Trump just days before the Commerce Department granted the companies licenses to sell AI chips. The approved shipments include Nvidia's H20 and AMD's MI308, both of which are stripped-down versions of their AI-focused GPUs, designed to comply with US export rules to China. After the Trump administration put restrictions on AI chip sales to China in April, both companies confirmed last month that they would soon resume shipments once they received licenses. Nvidia's H20 chip came under fire last week after the Chinese government raised concerns that its chips could have a government "backdoor."
[2]
The U.S. and China are engaged in a race over chip development -- both countries are racing to build infrastructure
Both superpowers are building up chip development capabilities while trying to reduce dependencies upon one another. The U.S. and China are locked in an unprecedented race over semiconductor technology, driven by national security concerns, economic competitiveness, and the belief that control of advanced chips will determine global leadership in the decades ahead. Chips are the foundation of everything from smartphones and data centers to fighter jets and the energy grid, as well as powering the AI tech both Washington and Beijing see as critical for future military and economic power. The rivalry has intensified in recent months as both sides have recognised vulnerabilities in their supply chains. The U.S., home to most chip design and high-end equipment companies, grew wary of depending on global manufacturing concentrated in East Asia - especially as China poured hundreds of billions into building its own chip industry, and constantly threatens invasion of Taiwan, where over 60% of global semiconductor production and more than 90% of the most advanced chips (below 7nm) passes through. China, in turn, saw its reliance on foreign (often American or U.S.-allied) technology as a strategic weakness, especially after repeated sanctions blocked its access to the most advanced chips and manufacturing equipment. This escalating contest has led to historic subsidies, new export controls, technical bans, and a scramble to onshore production. We reached out and interviewed multiple industry analysts to get a further understanding of how this dynamic could impact the industry. The two countries are engaged in an arms race to see who can stand up their own chip development first, which has resulted in a global divide between major superpowers. While neither side can yet claim decisive victory, their race is already reshaping trade, geopolitics, and the global tech landscape. "We're definitely seeing more bifurcation in the chip industry, as China pours money into building a self-sufficient supply chain," says Chris Miller, professor at Tufts University and the author of Chip War: The Fight for the World's Most Critical Technology. It's an assessment that William Matthews, senior research fellow for China and the world in the Asia-Pacific Programme at Chatham House, agrees with. "I think the long-term trend will be toward bifurcation as China catches up. Beijing is clear about its desire for independent technological capability across the board - I'm not sure we're on the 'brink' of this, but that does seem to be the direction of travel." But both believe the rupture hasn't yet arrived. Each country remains dependent on the other - at least for now. "China is still reliant on importing chipmaking tools and materials, especially for high-end production," explains Miller. China relies on imported lithography equipment, particularly EUV machines from ASML, which are restricted by U.S.-led export controls. It also depends on foreign EDA software and ultra-pure materials essential for leading-edge chips. These tools and technologies are extraordinarily complex, protected by IP, and take decades to master - areas where domestic alternatives are still underdeveloped. As a result, China cannot yet manufacture chips at the most advanced process nodes ( 5nm or below) at scale or efficiency. "I think the export control has been effective in controlling China's access to advanced chipmaking from TSMC, Samsung, and Intel and advanced chipmaking tools from ASML," says Ray Wang, research director for semiconductors, supply chain and emerging tech at The Futurum Group. It's an approach that some of the U.S. president's most senior advisors have given full-throated support to. "Restricting the sale of EUV lithography equipment to China is the single most important export control we have," David Sacks, the administration's AI and crypto czar, posted on social media in May. And beyond those struggles, the reality is that China is still a chip importer of its own. "It is also still importing large volumes of high-end chips because of their struggles to ramp up production capacity," says Miller. As of 2024, China's monthly chip production capacity reached around 8.85 million wafers, with most output coming from mature-node fabs (28nm and above). This figure is forecast to rise to 10.1 million wafers per month by the end of 2025, largely driven by government funding and 18 new fabs under development. But that's changing. Market research and tech consulting firm Yole Group predicts that China will hold 30% of the world's global foundry production capacity by 2030, making it the world's largest hub of semiconductor production. In 2024 alone, it bought 40% of all wafer fabrication equipment worldwide - recognising it needed to step up its production. However, when that does happen, and China manages to ramp up production, there will be significant changes for us all. "It will have global implications - and be yet another example of China successfully innovating and catching up under pressure from the U.S., while also exploiting a market for its own technology abroad, especially across the Global South," says Matthews. "I suspect we will see a pattern which is now quite familiar, of growing Chinese indigenous capability leading to deeper separation of ecosystems as the U.S. responds by attempting to restrict China further." That's concerning experts who are studying the area. "With U.S.-China tensions rising and technological competition intensifying, a deeper decoupling of the semiconductor supply chain now looks inevitable," says Wang, "spanning chip design, manufacturing, equipment, and other critical segments. If U.S.-China tensions persist - or deteriorate further - the global semiconductor supply chain could ultimately and completely split into two parallel ecosystems, which is occurring in front of our eyes." There are already signs of that happening. Washington is choking China's access to the tools used to design and make advanced chips. A May order from the US Commerce Department revoked existing licences for shipping electronic-design-automation (EDA) software and critical chemicals to Chinese customers, forcing vendors such as Cadence (which was fined $140 million for exporting design tools to China) and Synopsys to apply for case-by-case permits. In return, China had initially refused to approve, but then backed down on, a merger of Synopsys and Ansys, two of the largest providers of EDA software, which is essential for designing the architecture and logic of semiconductors before they are manufactured, in the world. These tools enable simulation, verification, and layout of complex chip designs, making them critical to advanced semiconductor R&D and production. China is responding to the threat of being squeezed out of the supply chain by backing its own homegrown production arms to the hilt. They're putting the full force of Chinese finance and regulation behind the plans. Big Fund III, a third-phase, state-backed war chest, aims to deploy ¥344 billion ($48 billion) into the country's weakest links of lithography and design software. The fund plans longer holding periods and aggressive consolidation to accelerate breakthroughs, according to people familiar with its mandate. Alongside that, Chinese leadership is also putting the power of the state to work in favour of the AI sector. The forthcoming 15th Five-Year Plan (2026-30) will have AI development at its core. Early drafts flagged by Chinese state media put semiconductor equipment self-reliance near the top of national priorities, alongside the "AI Plus" push to embed artificial intelligence across every sector of the economy. Despite those hints at the future direction, exact details are difficult to discern. "It's hard to interpret exactly how China's industrial policy is evolving because so much of its industrial policy spending happens at the provincial level and local level, as well as various public-private funds," says Miller. "Still, it does seem like the new iteration of the Big Fund is focusing more on EDA and chipmaking equipment. However, these are very challenging segments to enter, and it will take years for China to produce cutting-edge capabilities in these spheres." While China's chipmaking ambitions are indeed large, it has not been entirely successful in its efforts thus far, with a large number of projects and fabs entirely collapsing, despite lofty claims. What the ongoing feud between the U.S. and China means for the rest of the world and Europe is particularly vexing for experts. "That is a risk for Europe - again, following a pattern seen in other technologies from EVs to robotics," says Matthews. The problem is that "Europe has been consistently late in waking up to China's capability and challenge to the U.S.," he explains. In response, Europe ought to try and carve out niches in order to maintain competitiveness. "But that means massive focused investment and a strategy more like China's," Matthews says. "The question would be whether Europe has the political will to pursue that over the long term." Matthews argues there is a strong case for Europe to pursue chip production even if it lags behind the U.S. and China in order to strengthen its own autonomy and resilience - as it has in other areas, including its tech stack, with the development of proprietary versions of Google Docs and Microsoft Office - "but again, that needs to be accompanied by a real mindset shift on industrial policy and a plan to engage countries in the Global South as customers," Matthews explains. "The challenge will be catching up with China on these two counts." Still, given the EU's recent history in making sure it's in control of its own supply chain and regulation, and not at the whims of the United States, it seems likely. "Europe is probably going to consider a second EU Chips Act to build its semiconductor capabilities, which will probably focus on some of these unique chipmaking capabilities, as well as its niches in materials and equipment," says Miller. At the same time, Europe will have to compete in the global market for expertise and manufacturing tools. And the U.S. is making sure it's as competitive as possible to head off China. Five years ago, Washington wagered that a 25% investment tax credit would be enough to lure chipmakers home. It worked - up to a point. But a June Senate draft lifted the subsidy to 30%, and President Donald Trump's "One Big Beautiful Bill," signed in July, took it to 35% for fabs breaking ground before 2026, with sweeteners for AI-specific capacity. Industry has responded in kind: in March, before the Big Beautiful Bill was passed, Taiwan Semiconductor Manufacturing Co. (TSMC), one of the world's biggest names in the sector, lifted its financial commitment to onshore chip manufacturing capacity in Arizona from $65 billion to $165 billion, cementing the single largest foreign-direct investment in U.S. history. "AI is reshaping our daily lives and semiconductor technology is the foundation for new capabilities and applications," said TSMC Chairman and CEO C.C. Wei in a statement. "With the success of our first fab in Arizona, along with needed government support and strong customer partnerships, we intend to expand our U.S. semiconductor manufacturing investment by an additional $100 billion, bringing our total planned investment to $165 billion." "It's clear to me that TSMC in Arizona has been quite successful despite the early hurdles, and its P1 - the first fab in Arizona - is in fact in operation," says Wang. The P1 facility is expected to produce up to 30,000 wafers per month using 4nm and 5nm process technology, primarily for high-performance computing clients like Apple and Nvidia. "I expect its P2 and P3 will have [an] easier learning curve, and construction-to-operation process should be smoother." As for other investment from Texas Instruments, which announced a $60 billion U.S.-focused tech pledge in June that it said would create 60,000 jobs, and Micron, which has committed up to $100 billion to build the largest semiconductor fabrication facility in the U.S. in New York, focusing on memory chip production, with initial construction starting in the late 2020s, it's "too early to say," reckons Wang. The two countries are caught up in a delicate dance to try and one-up each other, while ensuring they keep access to the things on which they are reliant on one another for. In mid-July, the United States loosened its restrictions on the export of Nvidia's H20 chips, seemingly in exchange for China reallowing the export of rare earths that are vital in other chips' manufacturing. Until one side or the other can fully onshore all the required production processes, there's an awkward quid pro quo going on.
[3]
Nvidia and AMD reportedly sharing 15% of their China GPU revenue in exchange for export licenses -- 'unprecedented' export revenue sharing deal may have been struck
Both Nvidia and AMD have reportedly agreed to pay the U.S. government 15% of China-sourced revenues to unlock export licenses for previously restricted chips. Under the reported terms of the new deal, Nvidia will be able to resume H20 chip sales, and AMD will be able to sell its MI308 accelerators into China. The deal, not officially announced, has been reported independently by a multitude of outlets, including the BBC, FT, and Reuters. We also followed up with Nvidia for more details. The restrictions on exports of such potent AI accelerators were originally put in place due to national security concerns, but the 15% levy marks a significant shift in that strategy. The revenue-share deal would represent a landmark foray into uncharted territory. Several news agencies, such as the BBC and FT, point out that a deal where commercial entities pay a revenue share in exchange for government export license approval is unprecedented. Furthermore, the FT asserts that the U.S. Commerce Department has already started issuing H20 licenses last Friday. That would be just two days after Jensen Huang last met in person with President Trump. It is understood that AMD's licenses were also being inked ahead of the weekend. We don't have any AMD statements about the new 15% revenue-sharing deal at the time of writing. Nvidia has been quite quick to trot out an official statement. This morning, an Nvidia spokesperson told Tom's Hardware, "We follow rules the U.S. government sets for our participation in worldwide markets." Providing some context to the newly announced export license approval process, they added, "While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide." In addition, the statement repeated arguments in favor of relaxed cutting-edge technology export controls we have seen previously, "America cannot repeat 5G and lose telecommunication leadership. America's AI tech stack can be the world's standard if we race," ended the short statement. For Nvidia and AMD, perhaps this policy shift has come at a pivotal time. There have been signs of China-based competitors raising their competitiveness on several fronts. Only yesterday, we reported on Chinese state media molding public opinion by characterizing Nvidia H20 GPUs as "neither environmentally friendly, nor advanced, nor safe." The safety concerns seem to be a tit-for-tat response to Western powers, who cite similar concerns regarding Chinese-sourced semiconductors. and electronics. Nvidia has strenuously denied the existence of any kill switches, back doors, or spyware in its GPUs. Reuters provided some interesting context to the new 15% deal between Nvidia, AMD, and the U.S. government. According to the latest financials, Nvidia raked in $17 billion in revenue during its latest financial year from China. AMD's China business scored $6.2 billion in revenue in 2024. With the Green and Red team's expensive AI chips now available for sale in China, we could expect both yearly revenue figures to increase impressively. However, 15% of the total combined $23.2 billion (latest combined figures) is less than $3.5 billion for the U.S. Treasury. Also, we must remember that the 15% deal only covers the advanced AI chips that require these export licenses. In other words, the 15% deal is 'small potatoes' to a country like the U.S., when judged purely on financial terms.
[4]
Trump may allow Nvidia to ship hobbled current-gen Blackwell AI GPUs to China -- U.S. gov't would get 15% of related revenue, China firms would get access to far faster GPUs
U.S. President Donald Trump indicated he might permit Nvidia to sell cut-down versions of its Blackwell AI processors to Chinese entities, provided that the company cuts their performance significantly and shares 15% of revenue obtained from such transactions to the federal government, reports Bloomberg. The same can be applied to AMD's Instinct MI308. "It is possible I would make a deal [on a] 'somewhat enhanced in a negative way -- Blackwell' processor," Trump told reporters earlier today. "In other words, take 30% to 50% off of it." Trump made his Blackwell-related remarks on the same occasion as he confirmed that he had finalized an unusual arrangement allowing Nvidia to sell its H20 HGX GPU to China-based entities if it pays 15% of the related sales revenue to the U.S. government. According to a source, AMD will match this requirement for its Instinct MI308 sales to China. Cutting down the performance of Nvidia's B100, B200, or B300 GPU by 30% to 50% will still give Chinese entities formidable levels of performance. Today, the best thing Chinese companies can get is Nvidia's H20 HGX GPU that offers 148 FP16/BF16 TFLOPS and 296 FP8 TFLOPS for AI training and inference, respectively. However, a hypothetical B100 cut-down by 50% will give buyers 900 FP16/BF16 TFLOPS, 1.75 FP8 PFLOPS, and 3.5 FP4 PFLOPS for AI training and inference. No Chinese-made AI accelerator can match such rates. Nvidia's H20 HGX is 3.3 - 6.69 times slower than the full-blown H100 in AI workloads with AI data formats, so it is a massively cut-down processor. Nvidia had to build it this way to meet Biden-era performance restrictions on AI and HPC processors imposed on exports of compute GPUs to China on national security grounds. But if Trump's administration follows the U.S. President's proposal to cut down even the lowest-end data center-grade Blackwell by 50%, then it looks like both AMD and Nvidia will be able to ship much faster products to China. This might be good news for these companies, as they will be able to charge more for such hardware and increase their earnings. Of course, the U.S. government will also get its slice. However, the possible decision will certainly not please China hardliners who are not happy that Nvidia sells Chinese companies its H20 HGX product and who would prefer to supply them something even slower.
[5]
White House considering chip tracking to curb AI hardware smuggling to China amid enforcement gaps -- software or hardware tracking could be next step in U.S. export controls over leading-edge AI silicon
The U.S. is weighing a new approach to protect its lead in artificial intelligence: embedding location-tracking technology directly into high-end chips. The move comes as years of export controls -- and recent escalations -- have failed to fully stop smuggling into China, leaving policymakers looking for solutions that go beyond paperwork. This involves leading-edge AI GPUs such as Nvidia's H20, which are otherwise already permitted to be sold in China following lengthy bans. Talking to Bloomberg, Michael Kratsios, Director of the White House Office of Science and Technology Policy and one of the architects of the administration's AI action plan, confirmed that both software-based and physical tracking solutions are being discussed. "There is discussion about potentially the types of software or physical changes you could make to the chips themselves to do better location-tracking." The idea was explicitly included in the plan unveiled last month, which aims to keep U.S. technology dominant as AI adoption accelerates globally. The urgency reflects a persistent problem: export controls aren't closing the gap. Recent reports show Chinese companies obtained over $1 billion worth of Nvidia GPUs through smuggling in just three months, despite tightened U.S. restrictions. The challenge is compounded by third-party diversion routes through Southeast Asian nations such as Malaysia and Thailand, which U.S. officials are now scrutinizing as potential hubs for illicit shipments. Building location awareness into chips is meant to address these loopholes, but it comes with technical and commercial hurdles. Unlike smartphones or laptops, AI accelerators operate in data centers where GPS tracking is impractical. According to the report, sources familiar with early discussions suggest that delay-based verification systems -- which confirm location via secure time-stamped signals rather than constant connectivity -- are under consideration. These methods reduce reliance on external networks but introduce design complexity and must avoid any performance hit in high-compute environments. Industry concerns go beyond engineering. Adding tracking functionality could raise costs, create new attack surfaces for hackers, and even spark geopolitical retaliation. If U.S. policy mandates embedded monitoring, other regions may impose reciprocal requirements, further fragmenting global supply chains. That risk is real as Beijing recently summoned Nvidia officials over alleged "tracking functions" in its H20 chips, claims the company strongly denies. At the same time, enforcement debates have exposed differing views in the industry. Nvidia CEO Jensen Huang has publicly criticized U.S. chip restrictions as a "failure", warning that overregulation accelerates China's domestic chip development and erodes America's long-term advantage. This perspective underscores the delicate balance Washington faces -- controlling technology flow without pushing rivals to innovate faster. The scale of the problem leaves little room for complacency. China remains the largest global consumer of semiconductors and dominates legacy chip production, holding around 30% of the market and expected to account for 40% of future expansion through 2030. Even small percentages of diverted AI chips can have a significant impact, especially as they power advanced models and military systems. For now, hardware-level tracking represents Washington's most aggressive -- and controversial -- enforcement idea yet. Whether it becomes reality will depend on technical feasibility, industry cooperation, and the geopolitical fallout. But the message is clear: future breakthroughs in AI should run on American hardware, and under American oversight.
[6]
Klein: Nvidia, AMD Deal Doesn't Mean "Free-for-All" For Companies Selling to China
US President Donald Trump signaled on Monday that he'd be open to allowing Nvidia Corp. to sell a scaled-back version of its most advanced AI chip to China. Trump said he would consider a deal that would allow Nvidia to ship its Blackwell chips to China if the company could design it to be less advanced. "It's possible I'd make a deal" on a "somewhat enhanced -- in a negative way -- Blackwell" processor, he said in a briefing with reporters. "In other words, take 30% to 50% off of it." Jordan Klein, Managing Director at Mizuho Securities USA tells Bloomberg Businessweek Daily says the policy change enables Nvidia to sell more chips. (Source: Bloomberg)
[7]
Trump considering allowing Nvidia Blackwell sales in China
Nerfed versions of Nvidia's Blackwell GPUs could soon join its H20 on the list of AI accelerators approved for sale in China. Speaking to the press on Monday, US President Donald Trump suggested he'd be willing to entertain a deal to allow shipments of an "enhanced" version of Nvidia's Blackwell chips. "In other words, take 30 percent to 50 percent off of it," Trump said, according to Bloomberg. As we previously disclosed, AMD has reportedly entered into a similar arrangement regarding shipments of its own China-spec part, the MI308. In April, the Trump administration briefly blocked sales of the cards after it issued new restrictions on the export of high-end AI accelerators to China. The Trump admin lifted those restrictions in July, granting Nvidia and AMD export licenses allowing them to resume sales to Chinese customers. However, as we reported earlier this week, those licenses didn't come cheap. During the press conference, Trump confirmed that he'd hammered out a deal with Nvidia's CEO Jensen Huang to allow sales of its H20 GPUs in exchange for a 15 percent share of the revenues. By our estimates, the US government will be raking in somewhere in the neighborhood of $900 million a quarter or or more. You can bet that any deal to allow shipments of Blackwell accelerators will almost certainly mean additional kickbacks for Uncle Sam. While Nvidia has teased a new Blackwell-based part for the Chinese market, details remain limited. Nvidia declined to comment on future Blackwell chips, but emphasized the importance of maintaining US leadership in the emerging AI infrastructure market. "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. America cannot repeat 5G and lose telecommunication leadership. America's AI tech stack can be the world's standard if we race," a company spokesperson said. Previous reports have suggested that Nvidia may offer a cut down version of its RTX Pro 6000 Blackwell accelerators, announced back at GTC in March, for the Chinese market. At least in the US market, the PCIe card boasts 4 petaFLOPS of sparse FP4, 96GB of LPDDR7, and 1.6TB/s of memory bandwidth. Under current US performance caps, the chip would need to be cut down considerably -- far more than the 30-50 percent Trump has suggested. By our estimates the chip would be limited to 581 teraFLOPS of FP4 and about 1.4TB/s of memory bandwidth. While this would give the chip an edge over the H20 in lower precision workloads, at FP8 and or BF16 precision, floating point performance would be nearly identical. However, even the US-spec RTX Pro 6000 falls behind the H20's 4TB/s of memory bandwidth, which is arguably the more important spec for large scale model serving. Because of this, Huang may attempt to convince Trump to raise the performance caps or grant another exception to allow the sale of a cut down version of more powerful B200 accelerators. Such a chip would be better positioned to compete with Huawei's CloudMatrix rack systems which already outperform the H20 in several metrics. However, growing national security concerns over the potential inclusion of backdoors or remote kill switches on US-made chips could end up spooking Chinese buyers. While Nvidia has denied the inclusion of any such backdoors, kill switches, or spyware in its H20 and other chips, several legislators in the US have been pushing for location tracking functionality in a bid to crack down on gray and black market market chips. Over the weekend, Chinese state media painted Nvidia's H20 accelerators as unsophisticated, unsafe, and environmentally unfriendly. While we don't know what it'll cost Nvidia to get its Blackwell parts into China, the Trump administration is already facing backlash from the President's Republican colleagues for lifting the H20 restrictions. In late July, Representative John Moolenaar (R-MI), who chairs the House Select Committee on the CCP, penned a letter to Secretary of Commerce Howard Lutnick, demanding an explanation for the decision and warning that the chips could be used to build supercomputers in violation of US end-use rules. ®
[8]
US Explores Better Location Trackers for AI Chips, Official Says
The US is exploring ways to equip chips with better location-tracking capabilities, a senior official said, underscoring Washington's effort to curtail the flow of semiconductors made by the likes of Nvidia Corp. to China. Washington has espoused working with the industry to monitor the movements of the sensitive components, part of a broader plan to curtail smuggling and ensure American technology remains dominant. Last week, Beijing summoned Nvidia representatives to discuss US efforts around location-tracking and other alleged security risks related to its H20 chips.
[9]
Uncle Sam floats tracking tech to keep AI chips out of China
Plan would embed location verification in advanced semiconductors to combat black market exports The Trump administration wants better ways to track the location of chips, as part of attempts to prevent advanced AI accelerator hardware from getting into Chinese hands. Washington wants to equip semiconductors with location-tracking capabilities, and is keen on working with the industry to accomplish this, according to a senior White House official. The purpose is to enable the US to follow where shipments of key products for AI development, such as Nvidia GPUs, are actually ending up, so as to aid efforts to prevent smuggling of the components into China. "There is discussion about potentially the types of software or physical changes you could make to the chips themselves to do better location-tracking," Michael Kratsios told Bloomberg. Kratsios is understood to be one of those behind the White House's AI Action Plan unveiled last month. However, he said he has not so far spoken directly with either Nvidia or AMD, the other major supplier of advanced GPUs used in AI training. The move follows the introduction of legislation in the US Senate and the House of Representatives in May to require the Department of Commerce to mandate that certain advanced chips (or products containing them) be equipped with a "location verification mechanism" to detect if shipments are being diverted after export. Neither of the two bills specified exactly how the tracking mechanisms would be expected to work. However, exporting companies would be responsible for reporting violations to the Commerce Department's Bureau of Industry and Security (BIS) in the event tracking is tampered with or the chips show up in places they shouldn't. Such a move is unlikely to play well with Beijing, which has already grilled Nvidia over allegations of backdoors in the company's designed-for-China H20 GPU chips that might allow US security services to monitor or remotely disable them. America's ever more elaborate attempts to curb China's AI expertise are perhaps based on claims that it is just a year or two behind the US in such technology, and recent reports that an estimated $1 billion worth of high-end Nvidia GPUs have made it to the Chinese black market, despite Washington's strict export regulations. In a related move, Senators Elizabeth Warren, D-Mass, and Mike Rounds, R-South Dakota, wrote to Commerce Secretary Howard Lutnick and Secretary of State Marco Rubio urging the administration to retain strict rules that discourage companies from offshoring their AI infrastructure. The letter [PDF], sent July 31, argues that America's edge in AI stems not just from software innovation but from the massive domestic buildout of datacenters and GPU clusters powering AI development. "AI is infrastructure," they wrote, warning that offshoring this infrastructure - tempted by foreign subsidies - could shift the center of gravity for frontier AI development away from the US and into the hands of rivals like China. The senators are calling for the forthcoming replacement to the administration's Diffusion Rule to impose robust security requirements on any overseas AI facilities and to ensure the bulk of advanced AI compute remains on US soil. ®
[10]
Trump opens door to sales of version of Nvidia's next-gen AI chips in China
Aug 11 (Reuters) - U.S. President Donald Trump on Monday suggested he might allow Nvidia (NVDA.O), opens new tab 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 American artificial intelligence capabilities to supercharge its military. Trump also confirmed and defended an agreement calling for U.S. AI chip giant Nvidia, led by Jensen Huang, and Advanced Micro Devices (AMD.O), opens new tab to give the U.S. government 15% of revenue from sales of some advanced computer chips in China, after his administration greenlit exports to China of less advanced AI chips known as the H20 last month. "Jensen also has the new chip, the Blackwell. A somewhat enhanced-in-a-negative-way Blackwell. In other words, take 30% to 50% off of it," Trump told reporters in an apparent reference to slashing the chip's capability. "I think he's coming to see me again about that, but that will be an unenhanced version of the big one," he added. Trump's administration halted sales of Nvidia's H20 chips to China in April, but the company said last month it had won clearance to resume shipments and hoped to start deliveries soon. "The H20 is obsolete," Trump said, saying China already had it. "So I said, 'Listen, I want 20% if I'm going to approve this for you, for the country'," he added. 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 new Intel CEO Lip-Bu Tan resign over ties to Chinese companies. Analysts said the levy may hit margins at the chipmakers and set a precedent for Washington to tax critical U.S. exports, potentially extending beyond semiconductors. The U.S. Commerce Department has started issuing licenses for the sale of H20 chips to China, another U.S. official said on Friday. Both the U.S. officials declined to be named because details have not been made public. The China curbs are expected to cost Nvidia and AMD billions of dollars in revenue, and successive U.S. administrations have sought in recent years to limit Beijing's access to cutting-edge chips that could bolster China's military. Washington does not feel the sale of H20 and equivalent chips compromises national security, said the first U.S. official. The official did not know when or how the agreement with the chip companies would be implemented, but said the administration would be in compliance with the law. The U.S. Constitution prohibits Congress from laying taxes and duties on articles exported from any state. The Export Clause applies to taxes and duties, not user fees. When asked if Nvidia had agreed to pay 15% of revenues 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. The Commerce Department did not immediately comment. China's foreign ministry said the country has repeatedly stated its position on U.S. chip exports. The ministry has previously accused Washington of using technology and trade measures to "maliciously contain and suppress China." The Financial Times, which first reported the development, said the chip firms agreed to the arrangement as a condition for obtaining the export licenses for their semiconductors, including AMD's MI308 chips. It added that the Trump administration had yet to determine how to use the money. "The Chinese market is significant for both these companies so even if they have to give up a bit of the money, they would otherwise make it look like a logical move on paper," AJ Bell investment director Russ Mould said. 'SLIPPERY SLOPE' Still, analysts and experts questioned the logic of resuming sales if the chips could pose a national security risk. "Decisions on export licenses should be determined by national security considerations and the tradeoffs of U.S. policy goals, not a revenue-creating possibility," said Martin Chorzempa, senior fellow at the Peterson Institute for International Economics, an independent research institution. "What it ends up creating is an incentive to control things, to then extract a payment, rather than controlling things because we're actually concerned about the risk to national security." U.S. Commerce Secretary Howard Lutnick said last month the planned resumption of sales of the AI chips was part of U.S. negotiations with China to get rare earths and 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 use American technology, even if the most advanced chips remained barred, to keep them on a U.S. "tech stack". Some elements of Trump's trade policy are already facing legal scrutiny, with a federal appeals panel skeptical of his claim that a 1977 law, traditionally used to sanction enemies or freeze assets, also empowered him to impose tariffs. "We aren't sure we like the precedent this sets," Bernstein analysts said of the revenue-share deal. "Will it stop with Chinese AI? Will it stop with controlled products? Will other companies be required to pay to sell into the region?" "It feels like a slippery slope to us." The analysts estimated the deal would 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. Nvidia generated $17 billion in revenue from China in the fiscal year ending January 26, representing 13% of total sales. AMD reported $6.2 billion in China revenue for 2024, accounting for 24% of total revenue. Nvidia has warned a China sales halt for H20 chips could cut $8 billion from July quarter revenue, while AMD has projected a $1.5 billion annual hit from the curbs. Reporting by Karen Freifeld Additional reporting by Arsheeya Bajwa, Yazhini MV and Gnaneshwar Rajan in Bengaluru, Liam Mo and Che Pan in Beijing. Editing by Jamie Freed, Miyoung Kim, Mark Potter, Devika Syamnath and Marguerita Choy Our Standards: The Thomson Reuters Trust Principles., opens new tab
[11]
Trump suggests he may not allow sales of advanced Nvidia chip in China
WASHINGTON, Aug 11 (Reuters) - U.S. President Donald Trump suggested on Monday that he would not make a deal with American AI chip giant Nvidia (NVDA.O), opens new tab, led by CEO Jensen Huang, to allow for sales of a next-generation advanced GPU in China, but stopped short of ruling it out. "Jensen also has the new chip, the Blackwell," Trump told reporters. "I wouldn't make a deal with that, although it's possible," he said. Reporting by Trevor Hunnicutt and Ryan Jones; Editing by Mark Porter Our Standards: The Thomson Reuters Trust Principles., opens new tab
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Trump says he asked for 20% cut from Nvidia, calls H20 an 'obsolete' chip
U.S. President Donald Trump (L) listens as Nvidia CEO Jensen Huang speaks in the Cross Hall of the White House during an event on "Investing in America" on April 30, 2025 in Washington, DC. President Donald Trump on Monday said that he initially asked Nvidia for a 20% cut of the chipmaker's sales to China, but the number came down to 15% after CEO Jensen Huang negotiated with him. The comments came after news broke over the weekend that Nvidia agreed to pay the federal government a 15% cut in return for receiving export control licenses that will allow it to once again sell the H20 chip to China and Chinese companies. Nvidia's Huang visited Trump in the White House on Friday. "I said, 'listen, I want 20% if I'm going to approve this for you, for the country,'" Trump said in a press conference in Washington. Trump said that Nvidia's H20 is an "old chip that China already has" and is "obsolete." He compared the H20 chip to Nvidia's current fastest artificial intelligence chip, which is called Blackwell, and said that he wouldn't allow those to be sold to China without significant downgrades, such as a 30% to 50% reduction in performance. "The Blackwell is super-duper advanced. I wouldn't make a deal with that," Trump said, adding that it was possible to make a deal for a "somewhat enhanced in a negative way" version of Blackwell. "That's the latest and the greatest in the world. Nobody has it. They won't have it for five years," Trump said. One reason for the U.S. export controls is fear that providing advanced chips to China could allow the foreign power to leapfrog the U.S. in AI capabilities. Many have said that could pose a threat to the national security of the U.S. Trump said that China already has chips with some similar capabilities to the H20. Huang has said that it is better for U.S. national security if Chinese AI developers use U.S. technology, and that denying them access to Nvidia chips would actually encourage the Chinese chip industry to develop and catch up. "He's selling a essentially old chip," Trump said. "Huawei has a similar chip." The H20 is a Chinese-specific chip that has had its performance slowed down. It is related to Nvidia's H100 and H200 chips that are used in the U.S. The H20 was introduced after the Biden administration implemented export controls on AI chips in 2023. In April, the Trump administration said it would require a license to export the H20 chip, and in May, Huang said that "effectively closed" the market off to Nvidia. Huang said that Nvidia was expecting to sell about $8 billion in H20 chips in the July quarter before sales were stopped. "While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide," an Nvidia spokesperson told CNBC on Monday. Trump on Monday also said that Huang plans to visit him again to negotiate export licenses for the Blackwell chips. "I think he's coming to see me again about that," Trump said. A White House official confirmed to CNBC that AMD, the second-place AI chip maker, will also pay 15% to receive an export license for its China-focused AI chip, the Instinct MI308.
[13]
Trump says he's open to letting Nvidia sell a downgraded version of its most advanced chip to China
Nvidia CEO Jensen Huang, right, speaks alongside President Donald Trump about investing in America, at the White House in Washington, on April 30, 2025. U.S. President Donald Trump has singaled that he'd be open to allowing Nvidia to sell a downgraded version of its most advanced artificial intelligence chip to China. Speaking at a press conference on Monday, Trump said that he could make a deal with Nvidia if it could reduce the performance of its Blackwell system. "It's possible I'd make a deal" on a "somewhat enhanced -- in a negative way -- Blackwell" processor, Trump said. "In other words, take 30% to 50% off of it." Trump indicated that he will meet with Nvidia CEO Jensen Huang regarding the Blackwell. "On the Blackwell, I think he [Huang] is coming to see me again about that," Trump said, adding that the Blackwell system is the "latest and the greatest in the world." Last month, Huang, who has lobbied Trump for access to the Chinese market after effectively being shut out, said he hopes to sell more advanced chips to China. The flurry of activity around semiconductors comes after Nvidia and AMD agreed to a deal to pay the U.S. government a 15% cut of revenue from chip sales to China in exchange for export licenses. Trump said he initially asked for a 20% cut but that the number came down to 15% after Huang negotiated. If the downgraded Blackwell chips were approved for export, it "would be a big deal going forward," said Paul Triolo, partner and senior vice president for China at advisory firm DGA-Albright Stonebridge Group. "The idea here is to addict China to substandard, or non-cutting edge technology, Triolo added.
[14]
Pay-to-Play? Trump Slaps 15% “Export Tax†on Big Tech’s China AI Chips
The Trump administration has forced Nvidia and AMD to share their profits in exchange for access to the lucrative Chinese market, creating a radical new playbook for the U.S. tech war. Nvidia and AMD have reportedly agreed to pay the U.S. government a 15% cut of their revenue from their specialized chip sales in China, in a deal so unconventional the business world is still reeling. The arrangement, effectively a new kind of "export tax," is an unprecedented move that ends a months-long blockade and reopens one of the world's largest markets for America's two most valuable chipmakers. The news, first reported by the Financial Times, reveals the original and transactional tactics the Trump administration is deploying to generate revenue and control the flow of strategic technology. Nvidia and AMD chips are highly sought after by companies and governments to train their AI tools in the current AI race. For Nvidia and AMD, agreeing to pay the government a portion of their profits was the lesser of two evils. Being completely locked out of the Chinese market was a financial catastrophe. Nvidia had been hit particularly hard. After the administration blocked its China-specific chips in April, the company was forced to take a $4.5 billion charge for excess inventory it could no longer sell. In May, it warned investors that the restrictions would cost the company an estimated $8 billion in revenue for the full fiscal year. Faced with losing billions, handing over 15% of future sales was a price they were willing to pay. The standoff is the latest chapter in the long-running U.S.-China tech war. The U.S. government has been trying to slow Beijing’s military advancement by blocking its access to high-end AI chips. After the previous administration banned the sale of their most powerful processors, Nvidia and AMD cleverly designed special, less-powerful "compliance chips†â€" like Nvidia's H2O and AMD's MI308 â€" specifically for the Chinese market. But in April, the Trump administration tightened the screws, requiring a special license to sell even these less powerful chips. That move triggered months of intense, high-stakes lobbying, marked by several White House visits from Nvidia CEO Jensen Huang, which ultimately led to this new arrangement. For the Trump administration, the deal is a win on multiple fronts. It provides a new stream of federal revenue that could help finance the massive tax cuts in the "One Big Beautiful Bill," the president's signature legislation. It also allows the administration to look tough on China while simultaneously protecting the financial health of critical American companies. In a carefully worded statement to Gizmodo, an Nvidia spokesperson avoided confirming the 15% figure but acknowledged the new reality. "We follow rules the U.S. government sets for our participation in worldwide markets," it reads. "While we haven't shipped H2O to China for months, we hope export control rules will let America compete in China and worldwide." The spokesperson added: "America cannot repeat 5G and lose telecommunications leadership. America's AI tech stack can be the world's standard if we race." This new deal is a radical departure from traditional trade policy. Governments typically encourage and subsidize exports from their national champions to boost trade balances. This new model, however, forces America’s most successful companies to pay for the privilege of competing abroad. It's a pragmatic compromise that gives Nvidia a path to reclaim its dominant market position and potentially push its market value past the unprecedented $5 trillion threshold. But it also sets a startling precedent for how the U.S. government could exert control over its most strategic industries in the future. AMD did not immediately respond to a request for comment.
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Trump says Nvidia will hand the U.S. 15% of its H20 chip sales to China
NVIDIA CEO Jensen Huang delivers his keynote address Wednesday, June 11, 2025 at the Vivatech fair in Paris. Michel Euler/AP hide caption The U.S. government will take 15% of the revenue that chipmaker Nvidia pulls in from sales in China of its H20 microchip, which is used in the development of artificial intelligence, President Trump said on Monday. At a news conference at the White House, Trump said Nvidia CEO Jensen Huang asked for restrictions on exports to be eased so that Nvidia could sell H20s into the Chinese market. "And 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. Trump said he asked for a 20% cut, and Huang haggled him down to 15%. Trump called the H20 "obsolete," and "an old chip that China already has ... in a different form, different name." Nvidia designed the H20 to be less powerful than the company's top-of-the-line microchips to comply with export controls. It is unclear under what executive authority the unprecedented payment agreement was forged, and whether it is considered a tax. In a statement, Nvidia said it follows "rules the U.S. government sets for our participation in worldwide markets," although a spokesperson declined to elaborate and did not confirm the 15% figure. Reports in the Financial Times and other news outlets have said Nvidia competitor Advanced Micro Devices (AMD) would also pass the U.S. government 15% of its revenue from sales to China of its MI308 chip. Trump did not mention AMD during the news conference, and the company did not immediately respond to a request from NPR for a comment. The revenue sharing agreement is the latest twist in a years-long back-and-forth over sales to China of advanced microchips used in the development of artificial intelligence. During his first administration, Trump restricted the export of high-end chips to China over concerns they could sharpen China's technological edge and threaten U.S. national security. The Biden administration ratcheted up export controls on chips and chipmaking gear. This spring, once back in office, Trump reversed course, allowing Nvidia to sell H20 chips to China, pausing plans for additional restrictions. In July, AMD said the Commerce Department would review licenses for the export of certain chips to China. "While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide," Nvidia's statement said. Trump suggested that Nvidia's Blackwell chip, which he called "super duper advanced," might also be in play, but in a diminished form -- and that he'd want a 30-to-50% cut of those sales. In July, Chinese regulators met Nvidia representatives to ask about possible "back doors" and other security risks in the H20. Nvidia said in a statement cybersecurity is critically important, and its chips have no backdoors or ways to be remotely accessed or controlled.
[16]
Tensions rise as Nvidia races to calm China over controversial AI chips built for surveillance
TSMC is still building chips for Nvidia, despite regulatory heat and uncertainty in China Nvidia's position in the global AI hardware market could soon be under scrutiny following news of an investigation from the Cyberspace Administration of China. The Chinese regulator has summoned the American chipmaker to explain potential "backdoor" risks in its H20 chips, developed specifically for China after US export restrictions disrupted prior sales of high-end AI processors. The concern stems from US legislative moves proposing location verification systems on chips intended for export, which Chinese authorities fear could compromise data sovereignty and user privacy. While Nvidia has firmly denied the existence of any such vulnerabilities, the Chinese government's decision to interrogate the issue introduces a new layer of uncertainty into the company's already complex relationship with its second-largest market. The regulator has not detailed any specific actions it plans to take, but the call to clarify potential security flaws suggests the company's access to Chinese institutions could face added friction. Nvidia's official position has remained consistent: its chips do not contain any embedded features that could allow remote access or control. In its own words, "Cybersecurity is critically important to us," and no "backdoors" exist in Nvidia hardware. However, this reassurance may not be enough to shift growing skepticism, especially as U.S. and Chinese policies around technology exports continue to diverge. Meanwhile, Chinese analysts have suggested the move could be a political gesture, mirroring concerns the US has raised about Chinese tech in recent years. What's notable is that even amid rising tensions, Nvidia continues to see robust demand for the H20 chip within China. The company has reportedly ordered 300,000 units from TSMC, reflecting the chip's ongoing relevance to Chinese developers, research institutes, and universities, all of which rely heavily on high-performance AI chips to drive local advancements. Even military and state-backed projects are known to use Nvidia technology. Despite public optimism and high-profile visits by Nvidia CEO Jensen Huang to China, the broader regulatory environment is increasingly unpredictable. The regulator is also looking into the acquisition of Israeli chip designer, Mellanox Technologies, claiming Nvidia violated some of the terms in the 2020 conditional approval of the deal. Supply chain uncertainty, potential import limits, or changes in licensing rules could eventually impact hardware availability and cost. As both nations dig deeper into their technology standoffs, Nvidia's global leadership in AI hardware is no longer guaranteed to go unchallenged.
[17]
Trump sparks concern after suggesting he might allow sales of Nvidia's advanced AI chips in China
The president says he could 'make a deal' for Nvidia to sell a downgraded version of its flagship Blackwell chip in China Donald Trump has suggested he might allow Nvidia to sell chips in China that are more technology advanced than currently permitted, despite deep-seated fears in Washington that Beijing could harness US artificial intelligence capabilities to supercharge its military. In a briefing on Monday, the president suggested he could "make a deal" for Nvidia to sell a downgraded version of its flagship Blackwell chip in China. The move could open the door to China securing more advanced computing power from the US, even as the two countries battle for technology supremacy, critics said. "Jensen [Huang, Nvidia CEO] also has the new chip, the Blackwell. A somewhat enhanced-in-a-negative-way Blackwell. In other words, take 30% to 50% off of it," Trump told reporters in an apparent reference to slashing the chip's computing power. "I think he's coming to see me again about that, but that will be an un-enhanced version of the big one," he added. The move sparked unease across Washington, where China hawks of both parties have long sought to keep Beijing generations behind US AI technology. Nvidia's chips are a major driver of the AI boom, highly sought-after by both China and the US. "I am concerned by reports that the US government will be taking a cut of the proceeds from the sale of advanced H20 and equivalent chips to China," John Moolenaar, the Republican head of the House China committee, told the Financial Times. "Even with scaled-down versions of flagship Nvidia [chips], China could spend and buy enough of them to build world-leading, frontier-scale AI supercomputers," said Saif Khan, former director of technology and national security at the White House national security council under Joe Biden, who heavily restricted US AI chip exports abroad. "This could directly lead to China leapfrogging America in AI capabilities." It comes after the Trump administration confirmed an unprecedented deal with Nvidia - and fellow chipmaker AMD - to give the US government 15% of revenue from sales of some advanced chips in China. The arrangement covers revenue from Chinese sales of Nvidia's H20 chips, and AMD's MI308 chips. The H20 and MI308 chips were banned from sale to China in April, despite the lower-powered H20 being designed specifically to abide by restrictions introduced by the Biden administration. However Nvidia said last month it had won clearance to resume shipments and hoped to start deliveries soon. Trump on Monday defended the agreement: "I said, 'Listen, I want 20% if I'm going to approve this for you, for the country'", in an apparent reference to the percentage he initially sought before negotiations with Nvidia. 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 new CEO, Lip-Bu Tan, over his ties to Chinese companies. The US government has for several years sought to limit supplies of technology to China that could be used in ways that threaten US national security, especially chips that can power artificial intelligence development and weapons. China's foreign ministry said on Monday that the country had repeatedly stated its position on US chip exports. The ministry has previously accused Washington of using technology and trade measures to "maliciously contain and suppress China".
[18]
Nvidia, AMD to give the U.S. 15% of China their chip sales
Nvidia and AMD are reentering China's AI-chip market -- by writing checks to the U.S. Treasury. To resume selling AI-capable chips such as the H20 and MI308, which were caught in Washington's tightening net of semiconductor restrictions earlier this year, the two companies have reportedly agreed to hand over 15% of their China revenue to the U.S. government in exchange for export licenses. The news is an export-policy twist that nobody saw coming: an arrangement that doesn't come with new specs or a quota but instead comes with a price tag that could add up to billions in revenue for the government. The deal was first reported by The Financial Times, and U.S. officials confirmed the news to Reuters. They haven't said whether the 15% cut will be skimmed off at the point of sale or collected later, or where it will be allocated once it lands in the Treasury Department's coffers. For both companies, the deal comes because China is simply too important to write off. Last year, Nvidia booked roughly $17 billion from the market -- about 13% of its total revenue. AMD leaned in even harder, pulling in $6.2 billion, nearly a quarter of its sales. But the export ban imposed by the Trump administration in April put both companies on the defensive, with Nvidia taking a $5.5 billion write-down on stranded H20 inventory and warning of billions in lost sales. AMD flagged $800 million in inventory-related charges and projected a $1.5 billion revenue hit for the year, with gross margins taking as much as an 11-point knock. Those hits showed up fast in the quarterly numbers. AMD's second-quarter revenue jumped 32% year-over-year to $7.7 billion, but the lift came from gaming and PC chips. The data-center unit -- home to its AI lineup -- grew 14% to $3.2 billion, but performance was blunted by the MI308 ban. Gross margin fell to 43%. Nvidia hasn't yet reported a full quarter under the new restrictions, but a similar hit is expected, even as the company continues to outperform expectations. A rule shift this summer changed everything. In July, the Commerce Department began issuing licenses for the H20 -- clearance that arrived after Nvidia CEO Jensen Huang met with President Donald Trump in Washington. AMD followed close behind with a license for its MI308. The new licenses don't restore pre-ban margins -- every $1 billion in China chip sales now means $150 million off the top for Nvidia and AMD -- but they replace a total freeze with a steady, if slimmer, stream. Behind the scenes, the Commerce Department is grappling with its worst export‑license backlog in over 30 years, delaying approvals and raising risks for U.S. exporters. The move is unusual in the history of U.S. export controls, which have typically been blunt instruments -- either an outright ban or a technical downgrade to meet performance caps. This is the first time Washington has publicly tied access to a direct revenue share, a model that could be replicated in other sectors where the U.S. controls choke-point technology. Chinese state media have already reacted with suspicion. Doubts about the H20's safety, environmental standards, and alleged backdoor capabilities have been amplified following the deal with the U.S. government, which Nvidia has denied. Right now, the company is working on China-specific chip variants, including a downgraded H20 with lower memory capacity for export compliance, and it's exploring a Blackwell-based GPU for China that is expected to arrive later. Huang, however, has said that he wants to ship more advanced chips to Beijing. AMD, meanwhile, has been more tight-lipped about any China-only product plans. For now, Nvidia and AMD are making the same calculation that it's better to take a 15% haircut on billions in sales than to hand the entire market to any foreign rivals. Whether business deals like this one become a one-off fix or a fixture in U.S. trade policy, the message is blunt: If Washington controls the gate, it can charge admission -- and the world's most valuable chipmakers will pay to get through.
[19]
'We negotiated a little deal': Trump says Nvidia and AMD will kick back 15% of China chip sales in potentially unconstitutional arrangement
Nvidia and AMD agreed to share 15% of their revenues from chip sales to China with the U.S. government, President Donald Trump confirmed at a press conference Monday. The Trump administration halted the sale of advanced computer chips to China in April over national security concerns, but Nvidia and AMD revealed in July that Washington would allow them to resume sales of the H20 and MI308 chips, which are used in artificial intelligence development. The president said he originally wanted 20% of sales in exchange for Nvidia obtaining export licenses to sell the "obsolete" H20 chip to China, but credited Nvidia CEO Jensen Huang for negotiating him down to 15%. "So we negotiated a little deal. So he's selling a essentially old chip," Trump said. Nvidia did not comment about the specific details of the agreement or its quid pro quo nature, but said they would adhere to the export rules laid out by the administration. "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," Nvidia wrote in a statement to the AP. "America cannot repeat 5G and lose telecommunication leadership. America's AI tech stack can be the world's standard if we race." AMD did not immediately reply to a request for comment. The top Democrat on a House panel focusing on competition with China raised concerns over the reported agreement, calling it "a dangerous misuse of export controls that undermines our national security." Rep. Raja Krishnamoorthi, the ranking member of the House Select Committee on China, said he would seek answers about the legal basis for this arrangement and demand full transparency from the administration. "Our export control regime must be based on genuine security considerations, not creative taxation schemes disguised as national security policy," he 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." Derek Scissors, senior fellow and China expert at the conservative American Enterprise Institute, questioned the constitutionality of the deal and also warned against risking national security for revenue. "There's no precedent for this, probably because export taxes are unconstitutional," said Derek Scissors, senior fellow and China expert at the conservative American Enterprise Institute. "They call it a fee, but 15% of sales revenue is about a standard a tax as it comes. For this reason, I don't think the 'arrangement' is at all durable. '' "If it were to last, it has two possible implications. First, there's a possible export tax that high-profile companies and goods must consider. Or the tax only applies in exceptional situations, such as changing export controls. Then we'd risk national security for the sake of tax revenue, which is effectively the same as cutting the defense budget," Scissors said. Back in July, Nvidia argued that tight export controls around their chip sales would cost the company an extra $5.5 billion. They've argued that such limits hinder U.S. competition in a sector in one of the world's largest markets for technology, and have also warned that U.S. export controls could end up pushing other countries toward China's AI technology. Commerce Secretary Howard Lutnick told CNBC in July that the renewed sale of Nvidia's chips in China was linked to a trade agreement made between the two countries on rare earth magnets. Restrictions on sales of advanced chips to China have been central to the AI race between the world's two largest economic powers, but such controls are also controversial. Proponents argue that these restrictions are necessary to slow China down enough to allow U.S. companies to keep their lead. Meanwhile, opponents say the export controls have loopholes -- and could still spur innovation. The emergence of China's DeepSeek AI chatbot in January particularly renewed concerns over how China might use advanced chips to help develop its own AI capabilities. -- - Associated Press writers Josh Boak and Shawn Chen contributed to the reporting.
[20]
What Trump's Nvidia and AMD China deal means for the world
Nvidia CEO Jensen Huang alongside President Donald Trump about investing in America, at the White House on April 30.Jim Watson / AFP via Getty Images file Nvidia and AMD have agreed to share 15% of their revenue from sales to China with the U.S. government, the White House confirmed Monday, sparking debate about whether the move could impact the chip giants' business and whether Washington might seek out similar deals. In exchange for the revenue cut, the two semiconductor companies will receive export licenses to sell Nvidia's H20 and AMD's MI308 chips in China, according to the Financial Times. "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," Nvidia said in a statement to NBC News. "America cannot repeat 5G and lose telecommunication leadership. America's AI tech stack can be the world's standard if we race." AMD said in a statement that its initial license applications to export MI308 chips to China have been approved. The arrangement crafted by U.S. President Donald Trump's administration is "unusual", analysts told CNBC, but underscores the transactional nature of the current White House leader. Meanwhile, investors see the move as broadly positive for both Nvidia and AMD, which once more secure access to the Chinese market. Nvidia's H20 is a chip that has been specifically created to meet export requirements to China. It was previously banned under export curbs but the company last month said it expected to receive licenses to send the product to China. Also in July, AMD said it would resume exports of its MI308 chips. At the time, there was no suggestion that the resumption of sales to China would come with conditions or any kind of revenue forfeiture, and the step was celebrated by markets because of the billions of dollars worth of potential sales to China that were back on the table. On Monday, Nvidia shares rose modestly, while AMD's stock was up more than 2%, highlighting how investors believe the latest development is not a major negative for the companies. "From an investor perspective, it's still a net positive, 85% of the revenue is better than zero," Ben Barringer, global technology analyst at Quilter Cheviot, told CNBC. "The question will be whether Nvidia and AMD adjust their prices by 15% to account for the levy, but ultimately it's better that they can sell into the market rather than hand the market over entirely to Huawei." Huawei is Nvidia and AMD's closest Chinese rival. Uncertainty nevertheless still looms for both U.S. companies over the longer term. "In the short term, the deal gives both companies some certainties for their exports to China. For the long term, we don't know if the U.S. government may want to take a bigger cut from their China business especially if their sales to China keep growing," George Chen, partner and co-chair of the digital practice at The Asia Group, told CNBC. Multiple analysts told CNBC that the deal is "unusual," but almost par for the course for Trump. "It's a good development, albeit a strange one, and feels like the sort of arrangement you might expect from President Trump, who is a deal-maker at heart. He's willing to yield, but only if he gets something in return, and this certainly sets an unusual precedent," Barringer said. Neil Shah, partner at Counterpoint Research, said the revenue cut is equivalent to an "indirect tariff at source." Daniel Newman, CEO of The Futurum Group, also posted Sunday on X that the move is a "sort of 'tax' for doing business in China." But such deals are unlikely to be cut for other companies. "I don't anticipate it extending to other sectors that are just as important to the U.S. economy like software and services," Nick Patience, practice lead for AI at The Futurum Group, told CNBC. The U.S. sees semiconductors as a strategic technology, given they underpin so many other tools like artificial intelligence, consumer electronics and even military applications. Washington has therefore put chips under an export control regime unlike that of any other product. "Semiconductor is a very unique business and the pay-to-play tactic may work for Nvidia and AMD because it's very much about getting export approval from the U.S. gov," The Asia Group's Chen said. "Other business like Apple and Meta can be more complicated when it comes to their business models and services for China." Semiconductors have become a highly sensitive geopolitical topic. Over the last two weeks, China has raised concerns about the security of Nvidia's chips. Late last month, Chinese regulators asked Nvidia to "clarify" reports about potential security vulnerabilities and "backdoors." Nvidia rejected the possibility that its chips have any "backdoors" that would allow anyone to access or control them. On Sunday, Nvidia again denied that its H20 semiconductors have backdoors after accusations from a social media account affiliated with Chinese state media. China's state-run newspaper Global Times slammed Washington's tactics, citing an expert. "This approach means that the US government has repudiated its original security justification to pressure US chip makers to secure export licenses to China through economic leverage," the Global Times article said. The Chinese government is yet to comment on the reported revenue agreement. Trump's deal with Nvidia and AMD will likely stir mixed feelings in China. On the one hand, China will be unhappy with the arrangement. On the other hand, Chinese firms will likely want to get their hands on these chips in order to continue to advance their own AI capabilities. "For China, it is a conundrum as they need those chips to advance their AI ambitions but also the fee to the US government could make it costlier and there is a doubt of US "backdoors" considering US has agreed for chipmakers to supply," Counterpoint Research's Shah said.
[21]
Nvidia, AMD to pay U.S. government 15% of China AI chip sales in an unusual export agreement
Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports. U.S. chipmakers Nvidia and AMD will pay the U.S. government 15% of revenue generated by sales of their AI chips in China, a White House official confirmed to CBS News. The Financial Times on Sunday reported that the agreement between the tech giants and the U.S. government was reached as a condition for granting export licenses for China, which were provided last week. A U.S. official confirmed the "broad strokes" of the report to CBS. The arrangement, with companies providing a stream of revenue in exchange for export licenses, is highly unusual as corporations typically do not pay the federal government a share of revenue from their export sales. Export licenses also do not carry any fees, according to shipping giant Maersk. The revenue-sharing plan comes after the White House announced in April that it would restrict sales of Nvidia's H20 chips and MI308 chips from rival chipmaker AMD to China. However, Nvidia CEO Jensen Huang last month said it had won approval from the Trump administration to sell its H20 chips to China. The H20 chip, which is specialized for artificial intelligence applications, was developed by Nvidia for the Chinese market, while AMD's MI308 chips are also geared for AI. It is unclear how the Trump administration would use the money generated from the chip sales. Nvidia didn't comment on the specifics of the deal. In a statement, a 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." AMD did not immediately respond to a request for comment. Proponents of restrictions on sales of advanced chips to China say they are necessary to ensure the U.S. maintains a competitive edge as the two countries battle for AI dominance. They've also been viewed as a security safeguard. In one instance during the Biden administration, the Commerce Department said it was updating its export controls and said advanced AI capabilities "present U.S. national security concerns." "These controls were strategically crafted to address, among other concerns, the PRC's efforts to obtain semiconductor manufacturing equipment essential to producing advanced integrated circuits needed for the next generation of advanced weapon systems," the department said in a 2023 release.
[22]
Trump says Nvidia to give US cut of China chip sales
Washington (AFP) - President Donald Trump on Monday confirmed reports that semiconductor giant Nvidia would pay the United States 15 percent of its revenues from sales of certain artificial intelligence chips to China. Speaking to reporters at the White House, Trump argued that Nvidia's "H20" chips are "obsolete," despite previously being targeted for export restrictions. He said that to lift the restrictions, he had agreed to a 15-percent cut from Nvidia: "If I'm going to do that, I want you to pay us as a country something, because I'm giving you a release. I released them only from the H20." The California-based company produces some of the world's most advanced semiconductors but cannot ship its most cutting-edge chips to China due to concerns that Beijing could use them to enhance military capabilities. Nvidia developed the H20 -- a less powerful version of its AI processing units -- specifically for export to China. That plan stalled when the Trump administration tightened export licensing requirements in April. Nvidia CEO Jensen Huang met with Trump at the White House last week and agreed to give the federal government the cut from its revenues, a highly unusual arrangement in the international tech trade, according to reports in the Financial Times, Bloomberg and New York Times. "While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide," a Nvidia spokesperson told AFP. The company spokesperson added: "America cannot repeat 5G and lose telecommunication leadership. America's AI tech stack can be the world's standard if we race." Investors are betting that AI will transform the global economy, and last month Nvidia -- the world's most valuable company and a leading designer of high-end AI chips -- became the first company ever to hit $4 trillion in market value. The firm has, however, become entangled in trade tensions between China and the United States, which are waging a heated battle for dominance to produce the chips that power AI. 'Political tariff' The United States has been restricting which chips Nvidia can export to China on national security grounds. After Huang's meeting with Trump, the Commerce Department on Friday started granting the licenses for chip sales, according to media reports. Silicon Valley-based AMD will also pay 15 percent of revenue on Chinese sales of its MI308 chips, which it was previously barred from exporting to the country. AMD did not respond to requests for comment. The move comes as the Trump administration has been imposing stiff tariffs, with goals varying from addressing US trade imbalances, wanting to reshore manufacturing, and pressuring foreign governments to change policies. A 100 percent tariff on many semiconductor imports came into effect last week, with exceptions for tech companies that announce major investments in the United States. "It's a political tariff in everything but name, brokered in the shadow of heightened US-China tech tensions," Stephen Innes of SPI Asset Management said.
[23]
Trump says Nvidia's 'super-duper advanced' Blackwell AI chips might be part of future China deals as long as they're 'somewhat enhanced, in a negative way'
'I think he's coming to see me again about that, but that will be an un-enhanced version of the big one.' President Trump has been all over the AI chipmaking news recently, what with his appearance at the Washington AI summit late last month and his granting of licenses to Nvidia and AMD to sell previously banned AI chips to China. Trump was questioned at a press briefing on Monday about the deal, and it appears that future negotiations on more modern, cutting-edge hardware might also be on the table in future. "The chip that we're talking about, the H20... it's an old chip, China already has it, in a different form, different name" said Trump. "Jensen also has a new chip, the Blackwell, do you know what the Blackwell is?" he asked the assembled reporters. "The Blackwell is super-duper advanced. I wouldn't make a deal with that. "Although, it's possible I'd make a deal [with a] somewhat enhanced -- in a negative way -- Blackwell." Trump continued: "In other words, take 30% to 50% off of it. But that's the latest and greatest in the world, nobody has it, they won't have it for five years... but the H20 is obsolete, y'know it's one of those things, but it still has the market." "On the Blackwell, I think he [Jensen Huang] is coming to see me about that. But that will be an unenhanced version of the big one. Like... we will sometimes sell fighter jets to a country, and we'll give them 20% less than we have." Well, that all makes sense. Sort of. Nvidia has previously released the limited-AI-performance RTX 4090D and RTX 5090D for the China-only market in order to meet existing chip export restrictions, so creating a limited version of a Blackwell AI GPU and shipping it towards those same shores as part of a new deal strikes as much of the same thing. And given the immense power of a Blackwell chip, I'd imagine Chinese companies would be scrambling to get their hands on them, even if they've had 30 to 50% of their performance curtailed. Each GPU would likely still be quicker than an Nvidia H20, and a new agreement would perhaps cause an end to the alleged Chinese black market for Blackwell chips, of which, the Financial Times recently reported, $1 billion worth are said to have been sold over the past three months. What would the US be negotiating for in exchange for this hypothetical deal, I wonder? If I were a betting man, I'd say more rare earth metals and magnets, like the current arrangement. Still, there's always room to be surprised. Another Boeing 747 for the fleet? Trump says his new Qatar-provided model is much too big, so you never know.
[24]
Nvidia, AMD to pay US government 15% of revenue from AI chip exports to China - SiliconANGLE
Nvidia, AMD to pay US government 15% of revenue from AI chip exports to China Nvidia Corp. and Advanced Micro Devices Inc. will pay the U.S. government 15% of the revenue they generate from graphics card exports to China. The arrangement was first reported by the Financial Times on Sunday. In a press conference today, U.S. President Donald Trump detailed that he originally asked Nvidia to provide 20% of the revenue it generates from Chinese customers. Jensen Huang, the chipmaker's Chief Executive Officer, negotiated a 5% discount. "The agreement to pay 15% of chip sales revenue from sales to China is a reflection of the complexities of trading technology," said Forrester senior analyst Alvin Nguyen. "This appears to be a reversal of recent efforts to limit technology sales, especially AI, to China." In 2022, the Biden administration introduced a set of rules that blocked the sale of advanced graphics processing units to China. In response, Nvidia and AMD developed scaled-down versions of their GPUs called the H20 and MI308, respectively. The processors didn't meet the performance thresholds above which chip sales were blocked. Earlier this year, the Trump administration extended the export ban to the H20 and the MI308. Nvidia estimated at the time that that the move would cost it $8 billion in the second quarter. AMD told investors that it was expecting a $1.5 billion impact to full-year sales. After the export controls were extended, Huang revealed that Nvidia's market share in China had dropped from 95% to 50%. According to the Financial Times, he later met with Trump to discuss the policy. The meeting reportedly produced a "breakthrough" that led the Commerce Department to lift the ban. "The H20 is obsolete, it's one of those things. Trump said during today's press conference. "It's an old chip, China already has it in a different form or different name, they have it." Trump added that Nvidia may also receive permission to export a modified version of its Blackwell chip series to China. The processor would have to be "somewhat enhanced in a negative way," he added." In other words, take 30% to 50% off of it." The H20 is a modified version of a chip called the H100 that can provide up to four petaflops of performance. Nvidia's first-generation Blackwell chip, the B200, can manage up to 20 petaflops. Earlier this year, the company debuted a new version called the Blackwell Ultra that can run some workloads 50% faster than the original. "The demand for GPUs like NVIDIA is high everywhere and restrictions of their sale to China heavily impacted sales and revenue to NVIDIA, AMD, and Intel. This also comes during trade negotiations with China, so this can be seen as a bargaining chip or concession" Nguyen said. Earlier this year, the U.S. paused certain tariffs on imports from China as part of an effort to negotiate a new trade deal. Shortly after today's press conference, Trump signed an executive order that put the tariffs on hold for another 90 days.
[25]
Nvidia, AMD to pay 15% of China chip sale revenue to US government
NEW YORK -- Nvidia and AMD agreed to share 15% of their revenues from chip sales to China with the U.S. government, a U.S. government official has confirmed. President Donald Trump's administration had halted the sale of advanced computer chips to China back in in April, but Nvidia and AMD revealed in July that Washington would allow them to resume sales of the H20 and MI308 chips, which are used in artificial intelligence development. The official, who insisted on anonymity to discuss a policy not yet formally announced, confirmed to The Associated Press the revenue sharing terms of the deal, and said the broad strokes of the initial report by The Financial Times were accurate. The FT reports that Nvidia and AMD agreed to the financial arrangement as a condition for obtaining export license to resume sales to China. "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," Nvidia wrote in a statement to the AP. "America cannot repeat 5G and lose telecommunication leadership. America's AI tech stack can be the world's standard if we race." AMD did not immediately reply to a request for comment. Restrictions on sales of advanced chips to China have been central to the AI race between the world's two largest economic powers, but such controls are also controversial. Proponents argue that these restrictions are necessary to slow China down enough to allow U.S. companies to keep their lead. Meanwhile, opponents say the export controls have loopholes -- and could still spur innovation. The emergence of China's DeepSeek AI chatbot in January particularly renewed concerns over how China might use advanced chips to help develop its own AI capabilities.
[26]
What to know about the Trump administration's deal with AI chipmakers
The agreement paves the way for the sale of advanced AI chips in China. AI chipmakers Nvidia and Advanced Micro Devices struck an extraordinary accord to pay the United States government 15% of the revenue the two companies are set to make from products sold in China, a White House official confirmed to ABC News. In exchange for the payment, the Trump administration will grant the companies export licenses for the AI chips, allowing the firms to tap into a large market in China. The quid quo pro agreement between major corporations and the president holds little or no precedent. The Financial Times first reported the deal. Speaking to reporters at the White House on Monday, Trump recounted the agreement with Nvidia. "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. Here's what to know about the deal reached between Nvidia, AMD and the Trump administration. In recent years, Santa Clara, Calif.-based Nvidia has grown into one of the world's largest companies as its advanced chips have fueled the rapid development of chatbots and other AI tools. The company said last month that the Trump administration had granted the company permission to sell its H20 chip, a product specifically designed for sale to China. Nvidia developed the chip in compliance with export restrictions put in place by the Biden administration beginning in 2022. Despite the Trump administration's apparent green light last month, Nvidia did not receive licenses for chip exports to China over the ensuing weeks. The deal recently struck between the Trump administration and Nvidia will allow the company to obtain the export licenses and begin the sale of chips in China, a White House official said. AMD, which offers an MI308 chip for Chinese customers, will also receive permission for such sales, the official added. Some observers have opposed the sale of advanced AI chips in China, saying the technology would help the country keep up with the U.S. in the fast-growing AI industry. The Trump administration has previously challenged the view, describing Nvidia's H20 chip as inferior to similar products sold in the U.S. "We don't sell them our best stuff, not our second best stuff, not even our third best," Commerce Secretary Howard Lutnick told CNBC last month, referring to Nvidia's H20 chip as its "fourth best." In a statement to ABC News, Nvidia did not directly comment on the terms of the agreement. "We follow rules the U.S. government sets for our participation in worldwide markets," Nvidia said. "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. America's AI tech stack can be the world's standard if we race." AMD did not immediately respond to ABC News' request for comment. In exchange for approval of chip sales in China, Nvidia and AMD have agreed to pay the U.S. 15% of revenue derived from such business. The move marks the Trump administration's latest intervention in the affairs of an individual company. When Japan-based Nippon Steel acquired U.S. Steel in June, the Trump administration received a "golden share" that affords the White House significant influence over the company. The golden share allows the Trump administration to influence the makeup of the company's board and assert veto power over a host of major decisions, though the White House does not retain a financial stake in the firm. More recently, Trump last week called on the CEO of Intel, Lip-Bu Tan, to resign. In a message posted on social media, Trump accused Tan of being "HIGHLY conflicted." Trump did not explain why Tan should resign, nor did he provide evidence for his allegation of a conflict of interest. But the post came after Republican Sen. Tom Cotton raised concerns about Tan's alleged ties to China. Tan is still the company's CEO.
[27]
Nvidia, AMD to pay 15% of China chip sale revenue to U.S. government
NEW YORK (AP) -- Nvidia and AMD agreed to share 15% of their revenues from chip sales to China with the U.S. government, a U.S. government official has confirmed. President Donald Trump's administration had halted the sale of advanced computer chips to China back in in April, but Nvidia and AMD revealed in July that Washington would allow them to resume sales of the H20 and MI308 chips, which are used in artificial intelligence development. The official, who insisted on anonymity to discuss a policy not yet formally announced, confirmed to The Associated Press the revenue sharing terms of the deal, and said the broad strokes of the initial report by The Financial Times were accurate. The FT reports that Nvidia and AMD agreed to the financial arrangement as a condition for obtaining export license to resume sales to China. "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," Nvidia wrote in a statement to the AP. "America cannot repeat 5G and lose telecommunication leadership. America's AI tech stack can be the world's standard if we race." AMD did not immediately reply to a request for comment. Restrictions on sales of advanced chips to China have been central to the AI race between the world's two largest economic powers, but such controls are also controversial. Proponents argue that these restrictions are necessary to slow China down enough to allow U.S. companies to keep their lead. Meanwhile, opponents say the export controls have loopholes -- and could still spur innovation. The emergence of China's DeepSeek AI chatbot in January particularly renewed concerns over how China might use advanced chips to help develop its own AI capabilities.
[28]
Nvidia, AMD to Pay 15% of China Chip Sale Revenue to U.S. Government
NEW YORK (AP) -- Nvidia and AMD agreed to share 15% of their revenues from chip sales to China with the U.S. government, a U.S. government official has confirmed. President Donald Trump's administration halted the sale of advanced computer chips to China back in April over national security concerns, but Nvidia and AMD revealed in July that Washington would allow them to resume sales of the H20 and MI308 chips, which are used in artificial intelligence development. The official, who insisted on anonymity to discuss a policy not yet formally announced, confirmed to The Associated Press the revenue sharing terms of the deal, and said the broad strokes of the initial report by The Financial Times were accurate. The FT reports that Nvidia and AMD agreed to the financial arrangement as a condition for obtaining export license to resume sales to China. Nvidia did not comment about the specific details of the agreement or its quid pro quo nature, but said they would adhere to the export rules laid out by the administration. "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," Nvidia wrote in a statement to the AP. "America cannot repeat 5G and lose telecommunication leadership. America's AI tech stack can be the world's standard if we race." AMD did not immediately reply to a request for comment. Back in July, Nvidia argued that tight export controls around their chip sales would cost the company an extra $5.5 billion. They've argued that such limits hinder U.S. competition in a sector in one of the world's largest markets for technology, and have also warned that U.S. export controls could end up pushing other countries toward China's AI technology. Restrictions on sales of advanced chips to China have been central to the AI race between the world's two largest economic powers, but such controls are also controversial. Proponents argue that these restrictions are necessary to slow China down enough to allow U.S. companies to keep their lead. Meanwhile, opponents say the export controls have loopholes -- and could still spur innovation. The emergence of China's DeepSeek AI chatbot in January particularly renewed concerns over how China might use advanced chips to help develop its own AI capabilities. -- - Associated Press writers Josh Boak and Shawn Chen contributed to the reporting.
[29]
Chip giants Nvidia, AMD to pay US government 15 percent of Chinese revenue
Chipmakers Nvidia and AMD have agreed to pay the U.S. government 15 percent of artificial intelligence (AI) chip sales to China in order to secure export licenses, a U.S. official confirmed to The Hill. Nvidia will share 15 percent of revenue from sales of its H20 chips to Beijing, while AMD will pay the same portion of its MI308 chip sales. The unusual arrangement, first reported by the Financial Times, comes as the two companies seek to resume chip sales to China after a months-long pause. The Trump administration instituted new restrictions on Nvidia's H20 chips and AMD's MI308 chips in April, effectively blocking sales to China. However, both firms said last month that the government would resume reviewing their export licenses. "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," an Nvidia spokesperson said in a statement. "America cannot repeat 5G and lose telecommunication leadership," the spokesperson added. "America's AI tech stack can be the world's standard if we race." The administration's decision to allow H20 sales to China has been a source of controversy, facing pushback from both Democrats and Republicans, who have expressed concerns that it could boost China's AI capabilities. However, Commerce Secretary Howard Lutnick argued last month that China was only receiving Nvidia's "fourth best" chip, emphasizing the decision was part of a broader rare earth deal with Beijing.
[30]
Nvidia walks tightrope on US-China tensions
Nvidia is navigating an increasingly tenuous relationship between the U.S. and China, as the company seeks to sell its artificial intelligence (AI) chips to both countries while they engage in a high-stakes race to dominate the technology. The chipmaker, whose graphics processing units (GPUs) are considered the backbone of the AI boom, has seen a meteoric rise over the past few years, becoming the most valuable company in the world and the first to cross the $4 trillion threshold. However, as the U.S. and China compete for control, its chips have become a key target, creating a complex balancing act for the firm. "They're doing a spectacular job of walking that tightrope right now," said Stacy Rasgon, a senior analyst at Bernstein Research. "I hope they can stay up on the rope," he added. "Jensen's been doing a really good job of balancing what are some fairly opposing concerns from both sides. He's been doing a good job of walking that line." Nvidia's chips have become highly sought after, as companies and countries alike race to develop AI. This has also made the chips a key chokepoint, as the U.S. seeks to limit China's abilities to develop the technology. "The entire chip industry has been having to learn how to reengage with Washington after a couple of decades in which the products they sold weren't seen as particularly politically sensitive. Over the past decade, that's changed dramatically," said Chris Miller, an international history professor at Tufts University. While Nvidia isn't the only chipmaker facing restrictions, it sits in a unique position as the dominant market player. "Nvidia's the one that's supplying the bulk of the merchant AI infrastructure that everything's running on. Clearly, it's imperative everywhere and probably doubly so in China," Rasgon said. "To the extent that China's been building out their AI infrastructure, largely they've been building it out or desiring to build it out on Nvidia." In a statement to The Hill, a Nvidia spokesperson said, "Trying to cobble together datacenters from smuggled products is a nonstarter, both technically and economically. Datacenters are massive and complex systems, making smuggling extremely difficult and risky, and we do not provide any support or repairs for restricted products." "Rather than risk using smuggled products, the market will turn to widely available competitors such as Huawei, undercutting U.S. leadership in China and worldwide," the spokesperson said. The Biden administration initially limited some advanced chip sales to China in October 2022, prompting Nvidia to develop separate chips with slower processing speeds for sale on the Chinese market. However, the A800 and H800, alternatives to its A100 and H100 chips, were soon targeted in another round of export controls in October 2023. In response, Nvidia developed a new option for China, the H20 chip. The Trump administration initially cracked down on H20 sales to China in April, as tensions spiked between Washington and Beijing over the president's expansive tariff regime. However, shortly after a visit by Nvidia CEO Jensen Huang to the White House in July, the chipmaker said it had received assurances from the U.S. government that its H20 licenses would be approved. Commerce Secretary Howard Lutnick said the decision was part of a rare earth deal with Beijing, arguing China is only receiving the company's "fourth best" chip. The controversial move has faced pushback from both Democrats and Republicans, who contend the H20 can still boost China's AI capabilities. The decision represented a key win for Huang, who also received a shoutout from Trump just days later as he unveiled his AI Action Plan. The president reminisced on how he had at one point considered breaking up Nvidia. "I found out it's not easy in that business. I said, 'Suppose, we put the greatest minds together. They work hand in hand for a couple of years.' He said, 'No, it would take at least 10 years to catch [Huang] if he ran Nvidia totally incompetently from now on,'" Trump said. Nvidia's unique position in the GPU market and the broader AI race gives the company a "powerful voice" in Washington, Miller noted. "So long as it's an absolutely central player in AI technology that it's been over the past couple of years, I think it's not surprising that its voice is also heeded and taken seriously by governments as well," he said. "It's also not surprising that governments, both the United States and China and others, are trying to shape the market for Nvidia chips and other AI accelerators, given how central they seem to be both for the future of technology but also for prosperity and political power," he added. Huang has made three trips to China this year to simultaneously manage relations with Beijing amid the shifting export controls in the U.S. He has largely been able to keep the peace so far, albeit with some hiccups. China's Cyberspace Administration reportedly summoned Nvidia last week to explain "backdoor security risks" with its H20 chips. The chipmaker responded by releasing a blog post Tuesday, saying its chips "do not and should not have kill switches and backdoors." Kill switches are built-in mechanisms that would allow companies to remotely deactivate chips. "Embedding backdoors and kill switches into chips would be a gift to hackers and hostile actors," David Reber Jr., Nvidia's chief security officer, wrote. "It would undermine global digital infrastructure and fracture trust in U.S. technology. Established law wisely requires companies to fix vulnerabilities -- not create them." The concerns about backdoors come as some American lawmakers have pushed to add location tracking to chips in order to prevent them from ending up in the hands of foreign adversaries. Even with export controls, there has been widespread concern about chip smuggling. The Justice Department on Tuesday accused two Chinese nationals of illegally shipping tens of millions of dollars' worth of chips, including Nvidia H100s, to China. In a letter to lawmakers Thursday, Americans for Responsible Innovation, an AI policy group, called for an investigation into the "large-scale smuggling" of advanced AI chips into China and whether Nvidia took "sufficient measures" to prevent or report it. Despite these concerns, Nvidia remains in a fairly strong position with both the U.S. and China. Its situation stands in sharp contrast to that of Intel, which has come under fire in recent days over CEO Lip-Bu Tan's reported ties to China. Sen. Tom Cotton (R-Ark.) pressed Intel earlier this week over Tan's Chinese investments and his previous role as CEO of Cadence Design Systems, which recently pleaded guilty to violating export controls by selling chip design technology to a Chinese military university. On Thursday, Trump called for Tan to resign, suggesting he is "highly conflicted." "It does not appear that Lip-Bu has cultivated that personal relationship with Trump, and maybe that's biting him now," Rasgon noted. However, there are still factors that could derail Nvidia's careful balancing act. China hawks within the administration could push back on the less restrictive approach toward AI, while Beijing will likely continue to develop its own technology. "Even if the Chinese can use Nvidia chips, they're probably going to still be putting more effort into local alternatives," Rasgon added. "They have no choice, right, because we've shown we have the ability to cut them off at the knees when we want to."
[31]
Nvidia and AMD to Pay 15 Percent of China Chip Sale Revenue to U.S. Government in an Unusual Agreement
Nvidia and AMD agreed to share 15% of their revenues from chip sales to China with the U.S. government, a U.S. government official has confirmed. President Donald Trump's administration halted the sale of advanced computer chips to China back in April over national security concerns, but Nvidia and AMD revealed in July that Washington would allow them to resume sales of the H20 and MI308 chips, which are used in artificial intelligence development. The official, who insisted on anonymity to discuss a policy not yet formally announced, confirmed to The Associated Press the revenue sharing terms of the deal, and said the broad strokes of the initial report by The Financial Times were accurate. The FT reports that Nvidia and AMD agreed to the financial arrangement as a condition for obtaining export license to resume sales to China. Nvidia did not comment about the specific details of the agreement or its quid pro quo nature, but said they would adhere to the export rules laid out by the administration. "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," Nvidia wrote in a statement to the AP. "America cannot repeat 5G and lose telecommunication leadership. America's AI tech stack can be the world's standard if we race." AMD did not immediately reply to a request for comment. The top Democrat on a House panel focusing on competition with China raised concerns over the reported agreement, calling it "a dangerous misuse of export controls that undermines our national security." Rep. Raja Krishnamoorthi, the ranking member of the House Select Committee on China, said he would seek answers about the legal basis for this arrangement and demand full transparency from the administration. "Our export control regime must be based on genuine security considerations, not creative taxation schemes disguised as national security policy," he 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." Back in July, Nvidia argued that tight export controls around their chip sales would cost the company an extra $5.5 billion. They've argued that such limits hinder U.S. competition in a sector in one of the world's largest markets for technology, and have also warned that U.S. export controls could end up pushing other countries toward China's AI technology. Commerce Secretary Howard Lutnick told CNBC in July that the renewed sale of Nvidia's chips in China was linked to a trade agreement made between the two countries on rare earth magnets. Restrictions on sales of advanced chips to China have been central to the AI race between the world's two largest economic powers, but such controls are also controversial. Proponents argue that these restrictions are necessary to slow China down enough to allow U.S. companies to keep their lead. Meanwhile, opponents say the export controls have loopholes -- and could still spur innovation. The emergence of China's DeepSeek AI chatbot in January particularly renewed concerns over how China might use advanced chips to help develop its own AI capabilities. The preferred-rate deadline for the 2025 Inc. Best in Business Awards is this Friday, August 15, at 11:59 p.m. PT. Apply now.
[32]
Nvidia, AMD Agree to Pay 15% of China Chip Revenues to US
Nvidia (NVDA) and Advanced Micro Devices (AMD) plans to resume sales of key AI chips to China are set to come with some big strings attached. Both companies have agreed to pay 15% of their China chip revenues to the U.S. government in exchange for export licenses, a U.S. official confirmed, after the Trump administration tightened restrictions earlier this year citing national security concerns. Trump told reporters in a press conference Monday that he initially pressed Nvidia CEO Jensen Huang to agree to a higher 20% rate, but that the CEO had countered with 15%. "So we negotiated a little deal," Trump said. The president also suggested he could be open to expanding Nvidia's licenses to cover more powerful chips, after further negotiations and modifications to Nvidia's lineup for the China market. The H20 chip that Nvidia now expects to receive approval to start selling in China again is less powerful than its latest models, and had been tailored to meet Biden-era guidelines. Its most advanced chips are still prohibited from being sold in China. A spokesperson for Nvidia told Investopedia, "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. America cannot repeat 5G and lose telecommunication leadership. America's AI tech stack can be the world's standard if we race." AMD did not immediately respond to a request for comment. Both chipmakers have taken a financial hit from the Trump administration's curbs this year, with AMD last week reporting an $800 million charge in the second quarter related to restrictions on the sale of its AI chips to China. Nvidia said in May that it expects to report an $8 billion hit from export restrictions when it releases its quarterly results later this month. Shares of AMD were about 1% higher in recent trading, while Nvidia shares were little changed. The Nvidia deal, which comes after several high-profile visits by CEO Huang to the White House, marks a notable shift in how American companies and their leaders may be expected to engage with the government and respond to trade policy changes.
[33]
China draws red lines on US chip tracking with Nvidia meeting - The Economic Times
As the US and China look for any sort of leverage in a prolonged trade fight, Beijing sees an opportunity to win over the world by taking a stand against the Trump administration's plans to track high-end chips. Chinese internet regulators last week summoned Nvidia staff over alleged security risks with its less-advanced H20 chips. The action, citing calls from US lawmakers to build tracking features into the most powerful semiconductors, has yet to lead to any type of formal ban or restrictions. Either way, analysts see the move as not so much about the H20s, which Chinese state-backed entities have publicly employed for some time, but rather an easy way for Beijing to send a series of messages about the US plans: Domestic firms should be cautious, the world should be wary and Nvidia CEO Jensen Huang should influence the White House to shift course. "The recent summons of Nvidia serves as a warning for Nvidia's future products rather than a sign that the Chinese government found any loophole in H20," said George Chen, partner and co-chair of digital practice at The Asia Group, which was co-founded by former US Deputy Secretary of State Kurt Campbell. "China wants to use the Nvidia case to show China is a buyer, but it won't be a blind buyer." For now, the spat looks unlikely to blow up the wider US-China relationship. Beijing said the two sides agreed to maintain a tariff truce after talks last month in Stockholm, while Treasury Secretary Scott Bessent later said it's up to US President Donald Trump to make that call. "We're getting very close to a deal," Trump said in an interview with CNBC on Tuesday. "We're getting along with China very well." Michael Kratsios, one of the architects of a White House action plan on AI that calls for exploring chip-tracking technologies, told Bloomberg Television on Tuesday that officials are discussing the use of software or physical changes to better track restricted chips. He added that he's not had conversations "personally" with either Nvidia or Advanced Micro Devices Inc. about exploring location-tracking technology. Nvidia on Tuesday declared its opposition to any sort of backdoors, saying they enable hackers and undermine trust in US technology. "There are no back doors in Nvidia chips. No kill switches. No spyware," Nvidia said in a blog post. "That's not how trustworthy systems are built -- and never will be." The Chinese Cyberspace Administration's action suggests Beijing is drawing a broad line against any surveillance capabilities in American semiconductors, a position that may resonate around the globe, even with US allies. Trump's first administration warned governments to avoid using equipment from Huawei Technologies Co. over risks that China could use it for spying. "We started attacking Huawei because of the idea that there are secret backdoors in it, and now here the US is openly suggesting we should legally mandate backdoors in hardware that we sell. It's a huge deal," said Tom Nunlist, associate director at the Beijing-based consultancy Trivium. "What government would accept this?" The H20s have become a focal point in the broader debate over US export controls on China after American officials claimed that they allowed Beijing access to the chips as part of earlier trade talks in London. Trump's move to lift an earlier ban on their exports generated criticism from more hawkish lawmakers, who argue that the chips, while a diminished version of years-old Nvidia technology, will help China compete in AI. Commerce Secretary Howard Lutnick defended the decision, saying the US wanted to "sell the Chinese enough that their developers get addicted to the American technology stack." China's Commerce Ministry disputed the US version of events in a statement last month, saying the US "proactively" approved the sale of H20 chips and suggesting they weren't part of any wider tradeoff in return for rare-earth magnets. China views the H20s as on par with domestic offerings, even though it could still use them because local companies can't churn out enough AI chips to meet demand. "Yes, China does want the H20," said Ray Wang, a Washington-based research director focusing on semiconductors at The Futurum Group, citing significant purchases by leading tech companies such as ByteDance Ltd., Tencent Holdings Ltd. and DeepSeek before the US cut off access to the chips in mid-April. "They clearly prefer to have access to the H20." The Chinese Commerce Ministry didn't respond to faxed questions. Chinese state media has turned up the scrutiny on imported chips, with a commentary in the ruling Communist Party's flagship mouthpiece People's Daily calling devices with location tracking "infected." A Sunday editorial by China Daily dismissed the H20 as "castrated" and offered a different reason for the US policy reversal. "It is China's breakthroughs in producing its own AI chips that has prompted the US to lift its curbs on the exports of H20 chips just three months after they were banned," the newspaper said. Shares in Chinese chipmakers including Semiconductor Manufacturing International Corp. and Cambricon Technologies Corp. rose immediately after Beijing disclosed the meeting with Nvidia employees, as investors bet on homegrown alternatives. "It's a straightforward option for China to now put Nvidia on the negotiation table, either to trade for more supply security promises or to further push domestic substitution," said Tilly Zhang, a technology analyst with Gavekal Dragonomics. "Either way, it wouldn't be a loss from Beijing's point of view." While the two sides reached a truce that allowed the US to access rare-earth magnets, which are needed to make high-tech goods including smartphones and missiles, a final deal has yet to be worked out. In an interview aired over the weekend, US Trade Representative Jamieson Greer said both sides are "about halfway there" on easing China's export controls on rare earths. The desire for the chip-tracking technology stems from the US struggle to enforce export controls around the world. A proposed Chip Security Act, introduced to the House of Representatives in May, would require location-verification mechanisms on more advanced chips like Nvidia's H100 and B200, but not the H20. One possible method is "delay-based" location verification, which measures the time it takes for a signal to travel from trusted servers to target equipment to determine its location, according to analysis by Bloomberg Intelligence. Whether the US will press ahead with new mandates on chips remains an open question. Trump's desire for a deal with China means further curbs on chips are unlikely before the expected summit this fall, according to Chris Miller, professor of international history at Tufts University and author of Chip War. "The administration has many priorities and it's hard to see which is going to win out," he said. "It's very clear that the White House is going to try to balance the hawks' desire for restrictions with the broader US-China relationship."
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Nvidia stock -- will it soar after China chip deal or tank with Trump's 15% revenue cut? Breakthrough or short-term boost?
Nvidia stock is in the spotlight after the chipmaker secured approval to resume selling its advanced H20 AI chips to China. The deal, however, comes with a controversial twist -- the Trump administration is requiring Nvidia and AMD to give 15% of their China AI chip sales revenue to the U.S. government. While this move restores access to one of Nvidia's most important markets, it could also hit profit margins by up to 15 percentage points. Investors are watching closely to see if strong Chinese demand can outweigh the revenue cut and push Nvidia's stock price higher in the coming months.
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Nvidia strikes $3 billion revenue-sharing deal with Trump administration to resume AI chip sales in China
Nvidia made a special deal with the Trump administration to keep selling chips to China. The deal means Nvidia will share up to $3 billion in revenue with the US government this fiscal year to sell its H20 chips in China. President Trump confirmed the deal on Monday, saying he granted export licenses to Nvidia in exchange for 15% of the China sales revenue. Trump called Nvidia CEO Jensen Huang "a brilliant guy" during the announcement. Reports from multiple media outlets, including the Financial Times and Washington Post, said Nvidia and AMD made similar deals with Trump, citing unnamed sources. Some trade experts called the deal "blackmail" and said it might violate the US Constitution's ban on export taxes, as per the report by Washington Post. Nvidia did not officially confirm the deal but said they follow US government rules and hope export controls allow them to compete in China and worldwide. Nvidia and AMD shares dropped slightly on Monday after the news. China is very important to Nvidia, making up 13% of its revenue last fiscal year, as stated by Yahoo Finance. ALSO READ: Cristiano Ronaldo gets engaged to Georgina Rodríguez after 8 years - heartfelt announcement & family details revealed Nvidia has tried selling lower-power chips to China due to tighter US export controls for national security reasons. Nvidia launched its H20 chips (based on Hopper technology) in 2024. In April, the Trump administration unexpectedly banned Nvidia from exporting H20 chips to China, causing Nvidia to lose billions and its stock to fall sharply. The export ban was lifted in July, but US lawmakers still worry about China's AI development. Wall Street expects Nvidia to recover $15 billion in lost sales in the second half of the year, reaching about $20 billion total revenue from China for fiscal year 2026. If the revenue reaches $20 billion, the US government could earn $3 billion from the deal (15% of sales). Analyst Stacy Rasgon from Bernstein said it's better for Nvidia and AMD to sell AI chips to China than to let Chinese companies like Huawei take over the AI market, as per the Yahoo Finance report. ALSO READ: Apple may introduce an ultra-thin iPhone Air to replace the Plus model Huawei is a big Chinese tech company making chips to compete with Nvidia's H20 chips. Nvidia says US export controls might help Chinese rivals like Huawei to grow stronger. Currently, the revenue-sharing deal covers only Nvidia's H20 chips. (Trump's comment).In July, Nvidia also released new chips with its latest Blackwell architecture for the Chinese market. Analyst Rasgon expects China to start buying these new Blackwell-based chips from Nvidia as export rules allow. However, analyst Gil Luria from DA Davidson warns the deal could push China to rely more on domestic chipmakers like Huawei. Luria says China might not want to buy from US companies if they have to share money with the US government, according to the report by Yahoo Finance. Q1. Why did Nvidia make a deal with the US government for China chip sales? Nvidia made the deal to get permission to sell its H20 AI chips to China while sharing part of the revenue with the US government. Q2. How much money will the US government earn from Nvidia's China sales? The US government could earn up to $3 billion from Nvidia's revenue-sharing deal based on 15% of the China sales.
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Trump signals approval for scaled-down Nvidia AI chip sales to China - The Economic Times
US President Donald Trump suggested he may allow Nvidia to sell a reduced-performance version of its advanced Blackwell AI chip to China, despite national security concerns. Critics warned this could boost China's AI capabilities. The US also struck a rare deal to collect 15% of China chip sales revenue from Nvidia and AMD.US President Donald Trump on Monday suggested 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 US artificial intelligence capabilities to supercharge its military. The move could open the door to China securing more advanced computing power from the US even as the two countries battled for technology supremacy, critics said. "Jensen (Huang, Nvidia CEO) also has the new chip, the Blackwell. A somewhat enhanced-in-a-negative-way Blackwell. In other words, take 30% to 50% off of it," Trump told reporters in an apparent reference to slashing the chip's computing power. "I think he's coming to see me again about that, but that will be an unenhanced version of the big one," he added. Earlier, the Trump administration confirmed an unprecedented deal with Nvidia and AMD to give the US government 15% of revenue from sales of some advanced chips in China. The move sent shivers across Washington, where China hawks of both parties have long sought to keep Beijing generations behind US AI technology. "Even with scaled-down versions of flagship Nvidia (chips), China could spend and buy enough of them to build world-leading, frontier-scale AI supercomputers," said Saif Khan, former director of Technology and National Security at the White House National Security Council under former President Joe Biden, who heavily restricted US AI chip exports abroad. "This could directly lead to China leapfrogging America in AI capabilities." The most advanced chip Nvidia is currently allowed to sell to China is the H20, which is based off Nvidia's older Hopper architecture platform. The US AI chip company announced its latest Blackwell platform in early 2024. Reuters in May reported that Nvidia was preparing a new chip for China that was a variant of its most recent state-of-the-art AI Blackwell chips at a significantly lower cost. Nvidia has not disclosed the existence of the chip, or its capabilities compared with its US offerings. But the flagship US version of the Blackwell chip, which Nvidia unveiled in March, is up to 30 times faster than its predecessor. China's foreign ministry did not immediately respond to a request for a comment on Tuesday about Trump allowing sales of a version of the next generation AI chips. 'OBSOLETE' Trump on Monday defended the agreement calling for Nvidia and AMD to give the US government 15% of revenue from China sales, after his administration green-lighted exports to China of less advanced AI chips known as the H20 last month. Nvidia developed the H20 to be compliant with restrictions set by the previous Biden administration and started selling the chip to China in 2024. In April, the Trump administration stopped Nvidia from selling chips to China. But the company said last month it had won clearance to resume shipments and hoped to start deliveries soon. "The H20 is obsolete," Trump said on Monday, arguing China already had it. "So I said, 'Listen, I want 20% if I'm going to approve this for you, for the country.'" The deal is extremely rare for the United States 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 new CEO, Lip-Bu Tan, over his ties to Chinese companies. The US Commerce Department has started issuing licenses for the sale of H20 chips to China, a US official said on Friday. Washington does not feel the sale of H20 and equivalent chips compromises national security, a second US official told Reuters on Sunday. The second official did not know when or how the agreement with the chip companies would be implemented but said the administration would be in compliance with the law. 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 US export controls. China's foreign ministry said on Monday the country has repeatedly stated its position on US chip exports. The ministry has previously accused Washington of using technology and trade measures to "maliciously contain and suppress China."
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President Trump Confirms Deal With NVIDIA/AMD on Their Share of China Revenue; Calls Out H20 AI Chip as 'Obsolete,' Saying There's Only Room for a 'Less-Powerful' Blackwell AI GPUs For China in the Future
President Trump has verified that the US struck a deal with GPU manufacturers to export their chips into China, also claiming that NVIDIA is selling an obsolete chip to the region. There were reports that the Trump administration made a deal with NVIDIA and AMD, under which the firms would share 15% of revenue coming from China with the government. This was one of a kind deal secured by any administration out there, and it showed that President Trump is actually nitpicking corporations and their revenue from China, in order to let them continue their business with the region. Now, while talking to the press. The US President confirmed the claims, saying the administration was looking for a 20% share, but Jensen negotiated it to 15%. I wanted 20%, but Jensen negotiated me down to 15%. We are only doing this for the H20 chips. We may do this for Blackwell, but it would be a lesser version of the most powerful Blackwell chip. Apart from this, he also discussed the prospects of releasing newer AI GPUs for China, claiming that they could feature downgraded capabilities that don't give Chinese AI customers an advantage. This means that the US administration won't allow the flow of highly capable AI chips to the region, and NVIDIA would have to rely on subpar options. Now, based on this, the rumors claiming that Team Green is preparing for a GDDR7-based AI chip for China are sounding to be viable for now, but we will have to wait and see. President Trump also stated that NVIDIA's H20 chips are 'obsolete' and are nowhere near what the US currently offers its customers. In this matter, he isn't wrong at all, considering that the H20 chip has been in Chinese domestic markets for several years, and when you factor in their performance relative to solutions like the Blackwell, it is evident that the H20 is far behind. NVIDIA currently sees demand for the H20 chips in China, but this could change moving into next year, as the need for computing power increases. It would be interesting to see how the situation for NVIDIA-China evolves moving forward, but the prospect of introducing a more capable solution for the region is out of the equation.
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Trump opens door to sales of version of Nvidia's next-gen AI chips in China
U.S. President Donald Trump on Monday suggested he might allow Nvidia to sell a scaled-down version of its next-generation advanced graphics processing unit chip in China, despite deep-seated fears in Washington that Beijing 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. "Jensen (Huang, Nvidia CEO) also has the new chip, the Blackwell. A somewhat enhanced-in-a-negative-way Blackwell. In other words, take 30% to 50% off of it," Trump told reporters in an apparent reference to slashing the chip's computing power.
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Nvidia to Pay the U.S. Government 15% of China AI Chip Sales. How Will Its Revenue and Profits Be Impacted? | The Motley Fool
Nvidia's H20 AI chip situation is not ideal, but it's significantly better than having no H20 sales. Nvidia (NVDA -0.44%) and fellow graphics processing unit (GPU) maker Advanced Micro Devices, or AMD, have agreed to give the U.S. government 15% of their revenue from sales of their respective artificial intelligence (AI) data center chips designed for the China market in exchange for obtaining export licenses for these chips, according to the Financial Times, which first reported the story on Sunday night. The U.S. Commerce Department began issuing export licenses for Nvidia's H20 chip and AMD's MI308 chip on Friday, the Financial Times (FT) reported on Friday. Nvidia provided a statement to the FT after it broke the government deal story on Sunday night that included the following: "We follow rules the U.S. government sets for our participation in worldwide markets." Nvidia had designed the H20 AI-enabling GPU specifically for the Chinese market after earlier U.S. export controls, enacted under the administration of President Joe Biden, meant it couldn't sell its more advanced data center AI chips to China. In mid-April, the Trump administration expanded the restrictions to include the H20. Nvidia immediately halted its sales and took a charge of $4.5 billion on its Q1 results for H20 inventory and purchase commitments. Then in mid-July, Nvidia emailed investors who subscribe to the company's news and said it was "filing applications to sell the Nvidia H20 GPU again. The U.S. government has assured Nvidia that licenses will be granted, and Nvidia hopes to start deliveries soon." At the time, there was no mention of giving the government a 15% cut of H20 revenue as a condition for obtaining export licenses. We can get an estimate as to how this deal will affect Nvidia's financial results by looking at the company's fiscal first quarter, which ended on April 27. In that quarter, Nvidia sold $4.6 billion in H20 chips to China prior to the start of the export controls in mid-April. It said it was unable to ship $2.5 billion in H20 chips that it had already produced due to the export controls. So, had the restrictions not existed, Nvidia would have sold $7.1 billion in H20 chips to China customers in Q1. This amounts to 15.2% of $46.6 billion, which is what its total revenue would have been, absent the export controls. Over 15% of its total revenue is significant, so you can see the importance of Nvidia's China data center business. For its fiscal Q2 (which ended July 27), investors should expect Nvidia to report no sales of its H20 chip, because the export restrictions were in place the entire quarter. However, H20 sales should fully rebound in fiscal Q3 (late July to late October). When Nvidia provided Q2 guidance, it estimated that it would lose about $8 billion in H20 chip sales due to the export controls. So, keeping with roughly the same sequential quarter growth, let's assume Q3 H20 sales will be about $9 billion. In this case, Nvidia would pay the U.S. government $1.35 billion, which is 15% of $9 billion. While $1.35 billion seems like a huge number, it's only a small percentage of Nvidia's overall quarterly revenue. In Q1, Nvidia's total revenue was $44.1 billion -- and it would have been $46.6 billion, had it not "lost" sales of $2.5 billion due to the export restrictions. That $1.35 billion is only 2.9% of $46.6 billion. But the actual Q3 percentage will be smaller because Nvidia's revenue will be higher in Q3 than Q1. A revenue loss of somewhere between 2% to 3% of total sales is a very minor speed bump. Moreover, it's a much better situation than having no H20 sales. Data by YCharts. Nvidia is much more profitable than other major chipmakers. It can easily absorb giving the government a 15% cut of its H20 revenue. All numbers are generally accepted accounting principles (GAAP) numbers. Giving the government a 15% cut of H20 sales revenue should also negatively affect Nvidia's bottom line. But it should be an extremely minor dent, because Nvidia's data center platform is amazingly profitable. On that note, Nvidia overall is amazingly profitable. Nvidia doesn't break out its profitability by platform, so we'll have to use its overall numbers. In Q1, Nvidia's adjusted gross margin (gross profit divided by revenue) absent the $4.5 billion H20-related charge was 71.3%. The company provided its adjusted earnings per share (EPS) absent the charge, so I could calculate adjusted net income absent the charge and then from that calculate adjusted net profit margin (net income divided by revenue) absent the charge -- which would have been 56.1%. In other words, Nvidia converts more than half of its revenue into adjusted profits in a typical quarter, which is just phenomenal. It can easily absorb slightly less profitability on its H20 chips, which, again, account for roughly 15% of its total revenue in a typical quarter. In short, Nvidia stock's strong upward trajectory should not be hurt by the company having to give the government a slice of its H20 sales.
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Trump defends taking 15% cut of Nvidia, AMD chip sales to China
President Donald Trump defended his controversial deal requiring Nvidia and AMD to fork over 15% of their China sales revenue to the US government to skirt export controls -- insisting the computer chips involved are outdated technology. "No, this is an old chip that China already has," Trump said Monday, referring to Nvidia's H20 processor, adding that "China already has it in a different form, different name, but they have it." The president emphasized that America's most advanced chips remain off-limits to China, describing Nvidia's newest Blackwell processor as "super, super advanced" technology that "nobody has" and won't have "for five years." The two tech companies agreed to the deal under an arrangement to obtain export licenses for their semiconductors. Trump on Monday painted himself as a tough negotiator who extracted payment for access to the Chinese market while protecting America's technological edge. He described his negotiations with Nvidia CEO Jensen Huang as a back-and-forth over percentages. Trump initially wanted 20% of the sales money, but Huang talked him down to 15%, according to the president. "And he said, 'Will you make it 15?' So we negotiated a little deal," Trump recounted. The president repeatedly stressed that the H20 chips are essentially obsolete. "It's one of those things. But it still has a market," he explained, suggesting China could easily get similar technology elsewhere, including from their own company Huawei. Its' Blackwell chip, meanwhile, delivers two-to-four times the performance of previous generations of graphics processing units (GPUs) with over 208 billion transistors and cutting-edge AI capabilities. The US had previously blocked companies from selling certain chips to China, worried that advanced technology could help China compete with America in areas like artificial intelligence. Trump was adamant about keeping the best technology for America. Regarding the advanced Blackwell chip, he said, "I wouldn't make a deal with that, although it's possible I'd make a deal ... 30% to 50% off of it." He compared the deal with Nvidia and AMD over its MI308 chips to how America sells fighter jets to other countries but keeps the best features for itself. "We will sometimes sell fighter jets to a country and we'll give them 20% less than we have," he explained. AMD's stock price jumped more than 2% Monday, while Nvidia shares climbed modestly. Investors figure that keeping 85% of the money from China sales beats not making any money, which is what these companies were looking at. Trump framed the deal as putting America first, insisting the money goes to the country, not him personally. "When I say I want 20 (percent), I want for the country. I only care about the country. I don't care about myself," he said, defending against any suggestion of personal benefit. China isn't thrilled about the arrangement. Their state-run newspaper called out America for using "economic leverage" after originally claiming the export bans were about security. Meanwhile, Chinese officials have been questioning whether American chips might have secret "backdoors" that could let someone spy on them - accusations Nvidia firmly denies. "We follow rules the US government sets for our participation in worldwide markets," an Nvidia spokesperson told The Post. "While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide." The company warned that "America cannot repeat 5G and lose telecommunication leadership." "America's AI tech stack can be the world's standard if we race," the spokesperson added. The Post has sought comment from AMD and the Chinese government.
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How the world's most valuable company got caught in the middle of Trump's spat with China
Nvidia, the world's most valuable company, has found itself caught in the middle of U.S. President Donald Trump's historic trade war with China. The result: an extraordinary concession from a US$4.5 trillion corporation that will give the United States a percentage of every high-end AI chip sold in China. The deal, which AMD also signed for some of its chips, could split the difference between two competing Trump administration goals: maintain America's AI dominance while securing a critical trade agreement with China. It could also give the White House billions of dollars to spend as it wishes. Nvidia and AMD have agreed to pay the US government 15% of their revenues from semiconductor sales to China in exchange for licenses to export their technology there. The White House in April blocked the export of certain AI chips to China, including Nvidia's H20 chips and AMD's MI308 chips. The deal with the Trump administration allows the companies to obtain export licenses to restart sales of those chips in China, a US official told CNN. The Financial Times first reported the story Sunday. Nvidia previewed the deal last month, when it said it would resume sales of the H20 chip to China after the Trump administration expressed openness to allowing the export of certain AI chips again. But the 15% payment was a surprise. Trump said Nvidia was initially asked to pay a 20% cut, but they negotiated the rate down to 15%. The deal came together after Nvidia CEO Jensen Huang met with President Donald Trump on Wednesday, the official said. Although the export licenses were granted Friday, no shipments have yet been made. "We follow rules the US government sets for our participation in worldwide markets," a 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." AMD has not responded to CNN's request for comment. Governments, including the United States, have taken control of companies in the past when they were considered to be of strategic importance to national security. During the financial crisis in 2009, the United States took control of General Motors and Chrysler, and the proceeds of those stakes went directly into the US Treasury after the government sold them for a profit. But it's not clear that the US government has ever demanded a percentage of a company's business without taking an equity stake - or if it's even legal to do so. The US Constitution forbids taxes on exports. To get around that, the deal's terms have been structured as a voluntary agreement, so it won't be considered a tax or a tariff, a US official said. Instead, Nvidia and AMD will voluntarily send funds to the US government. The companies will have no say whatsoever on how the US government deploys that money after it is sent. "It's hard to identify any historical precedent for this sort of arrangement," said Sarah Kreps, law professor and director of the Tech Policy Institute at Cornell University's Brooks School of Public Policy. In recent years, the US government has sought to restrict China's access to advanced American technology in an effort to slow its progress on AI and let the United States get farther ahead. But the White House's reversal on export controls may be an acknowledgement that China is advancing in AI regardless, so American companies might as well be allowed to benefit. It could also give the White House another way to raise revenue for the US government, along with tariffs. "It seems like there's been some vacillation within the administration about and toward China, and I think that reflects the internal divide within the administration between the China hawks and the economic pragmatists," Kreps said. "It seems like increasingly, the economic pragmatists are holding sway." That approach would align with arguments from Nvidia's Huang, who has said that restricting sales of American AI chips is bad for US national security. Chinese developers could simply undermine US leadership by creating their own alternatives if they can't buy American technology, according to Huang, who has met with Trump repeatedly in recent months. The White House agrees with Huang, believing it's better to have China locked into a US-made chip sold through legitimate channels than to force China to the black market, a US official said. China has been able to subvert existing channels to obtain restricted chips anyway. Big questions remain about where the 15% commission idea emerged and what it could mean for national security. A US official said that the payment allows the administration to maintain control of the export process and bring in revenue for the US government in the process. Still, it's not clear that the penalty for Nvidia and AMD will effectively limit the flow of the chips or erase any potential national security issues. "If there's a legitimate national security concern about exporting these chips to China, then I don't see how the payments to the US government address those risks. In fact, they don't at all," said Scott Kennedy, senior adviser and trustee chair in Chinese business and economics at the Center for Strategic and International Studies. "And if there's not a sufficient national security risk or they can be adequately mitigated ... then the US government should just get out of the way and expect nothing in return." Nvidia released the H20 chip last year as a way to maintain access to the Chinese market -- which made up 13% of the company's sales in 2024 -- in the face of US export controls imposed by the Biden administration. But the chips are widely believed to have contributed to DeepSeek, an advanced Chinese AI model that shook Silicon Valley upon its release earlier this year, raising concerns that China was further ahead on AI than previously understood. After the Trump administration barred H20 sales to China in April, Nvidia said it took billions of dollars in charges and lost revenue because of the export controls in the first quarter and projected a similar outcome in the second quarter. So, even if it has to fork over 15% of those sales to the White House, resuming shipments of the H20 to China could mean billions more dollars in revenue for Nvidia -- which became the first publicly traded company to top $4 trillion in valuation last month. Shares of Nvidia (NVDA) rose as much as 0.5% on Monday. Combined, Nvidia and AMD could earn as much as $35 billion in annual revenue from sales of their H20 and MI380 chips to China, according to CFRA Research analyst Angelo Zino's estimates. That means the White House would earn around $5 billion in revenue. "We acknowledge the tax will have a negative impact on profit margins tied to China sales but view the reentry into the second-largest GPU market to be worth the cost," Zino said in emailed commentary Monday. Trump on Monday called Nvidia's H20 chip "obsolete," saying that China "already has it in a different form." But some experts disagree with Trump's characterization of the chips. "These H20s are still state of the art," CSIS's Kennedy said. Although they're less advanced, in some ways, than other Nvidia chips, "they also come with elements that make them extremely sophisticated and valuable," including their memory capabilities. Nvidia's H20 chip is also good at inference, says Param Singh, professor of business technologies and marketing at Carnegie Mellon University, which refers to the process an AI model goes through when answering a question. But Nvidia's H100 and H200 series chips, as well as its Blackwell line of chips, are much more powerful and better equipped to train large language models like OpenAI's GPT-5 he says. It's not the same as calling it obsolete, but using a chip like the H20 instead could mean it might take longer to train cutting edge AI models. "There's a huge difference in the amount of calculations that an H100 chip could do versus an H20," he said. Nvidia likely reasoned that there is enough Chinese demand for the chips to make the 15% commission to the White House a worthwhile trade-off for its business, according to Kreps. "You have to do a calculation based on what was lost from the export controls," she said. Trump on Monday left open the possibility that Nvidia could export its super high-end Blackwell chips for a higher price. The Trump administration had closed the door on the export of that technology to China -- even after reversing course on the H20. However, Trump on Monday said that he'd consider allowing Nvidia to sell the Blackwell chip. "The Blackwell is superduper advanced. I wouldn't make a deal with that, although it's possible," Trump said. "I'd make a deal a somewhat enhanced in a negative way. Blackwell, in other words, take 30% to 50% off of it, but that's the latest and the greatest in the world. Nobody has it. They won't have it for five years." Trump said Huang will return to the White House in the future to discuss selling an "unenhanced" version of Blackwell. "I think he's coming to see me again about that, but that will be a unenhanced version of the big one," Trump said. "You know, we will sometimes sell fighter jets to a country and we'll give them 20% less than we have." Questions from Beijing about the security of American AI chips also raise uncertainty about just how successful Trump's commission policy could be. China could choose not to buy US tech firm Nvidia's H20 chips, the social media account Yuyuan Tantian, which is affiliated with state broadcaster CCTV, said on Sunday. It claimed that the chips could have "backdoors" that impact their function and security, following previous similar claims from China's cybersecurity administration. Nvidia has repeatedly denied that its products have backdoors. However, that statement could be less an indication that China won't buy American chips and more a signal to Chinese tech companies to continue innovating in semiconductors even if US shipments do resume, Kennedy said. For the Trump administration, the cost-benefit analysis is that it opens up the flow of mid-tier chips to China while giving the administration a key bargaining chip in its ongoing trade talks, a US official said. Treasury Secretary Scott Bessent has called Nvidia export controls a "negotiating chip" in the larger US-China trade talks. But China knows that, and its posturing over supposed security concerns with the H20 chip this weekend suggests that it won't be won over so easily -- even if it wants the chips for its market.
[42]
Trump opens door to sales of version of Nvidia's next-gen AI chips in China
U.S. President Donald Trump on Monday suggested 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. "Jensen (Huang, Nvidia CEO) also has the new chip, the Blackwell. A somewhat enhanced-in-a-negative-way Blackwell. In other words, take 30 per cent to 50 per cent off of it," Trump told reporters in an apparent reference to slashing the chip's computing power. "I think he's coming to see me again about that, but that will be an unenhanced version of the big one," he added. Earlier, the Trump administration confirmed an unprecedented deal with Nvidia and AMD to give the U.S. government 15 per cent of revenue from sales of some advanced chips in China. The move sent shivers across Washington, where China hawks of both parties have long sought to keep Beijing generations behind U.S. AI technology. "Even with scaled-down versions of flagship Nvidia (chips), China could spend and buy enough of them to build world-leading, frontier-scale AI supercomputers," said Saif Khan, former director of Technology and National Security at the White House National Security Council under former U.S. president Joe Biden, who heavily restricted U.S. AI chip exports abroad. "This could directly lead to China leapfrogging America in AI capabilities." Reuters in May reported that Nvidia was preparing a new chip for China that was a variant of its most recent state-of-the-art AI Blackwell chips at a significantly lower cost. Nvidia has not disclosed the existence of the chip, or its capabilities compared with its U.S. offerings. But the flagship U.S. version of the Blackwell chip, which Nvidia unveiled in March, is up to 30 times faster than its predecessor. Trump on Monday defended the agreement calling for Nvidia and AMD to give the U.S. government 15 per cent of revenue from China sales, after his administration green-lighted exports to China of less advanced AI chips known as the H20 last month. The Trump administration halted sales of Nvidia's H20 chips to China in April, but the company said last month it had won clearance to resume shipments and hoped to start deliveries soon. "The H20 is obsolete," Trump said on Monday, arguing China already had it. "So I said, 'Listen, I want 20 per cent if I'm going to approve this for you, for the country.'" The deal is extremely rare for the United States 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 new CEO, Lip-Bu Tan, over his ties to Chinese companies. The U.S. Commerce Department has started issuing licenses for the sale of H20 chips to China, a U.S. official said on Friday. Washington does not feel the sale of H20 and equivalent chips compromises national security, a second U.S. official told Reuters on Sunday. The second official did not know when or how the agreement with the chip companies would be implemented but said the administration would be in compliance with the law. 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. China's foreign ministry said the country has repeatedly stated its position on U.S. chip exports. The ministry has previously accused Washington of using technology and trade measures to "maliciously contain and suppress China." Reporting by Karen Freifeld in New York. Additional reporting by Arsheeya Bajwa, Yazhini MV and Gnaneshwar Rajan in Bengaluru, Liam Mo and Che Pan in Beijing, Trevor Hunnicutt, Ryan Jones and Alexandra Alper in Washington and Stephen Nellis in San Francisco.
[43]
Nvidia and AMD agree to share China chip sale revenues with US government | BreakingNews.ie
Nvidia and AMD agreed to share 15% of their revenues from chip sales to China with the US government, a government official has confirmed. President Donald Trump's administration halted the sale of advanced computer chips to China back in April over national security concerns, but Nvidia and AMD revealed in July that Washington would allow them to resume sales of the H20 and MI308 chips, which are used in artificial intelligence development. The official, who insisted on anonymity to discuss a policy not yet formally announced, confirmed to the Associated Press the revenue sharing terms of the deal, and said the broad strokes of the initial report by The Financial Times were accurate. The FT reported that Nvidia and AMD agreed to the financial arrangement as a condition for obtaining export licence to resume sales to China. Nvidia did not comment about the specific details of the agreement or its quid pro quo nature, but said they would adhere to the export rules laid out by the administration. "We follow rules the US government sets for our participation in worldwide markets. While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide," Nvidia wrote in a statement to the AP. "America cannot repeat 5G and lose telecommunication leadership. America's AI tech stack can be the world's standard if we race." AMD did not immediately reply to a request for comment. The top Democrat on a House panel focusing on competition with China raised concerns over the reported agreement, calling it "a dangerous misuse of export controls that undermines our national security". Representative Raja Krishnamoorthi, the ranking member of the House Select Committee on China, said he would seek answers about the legal basis for this arrangement and demand full transparency from the administration. "Our export control regime must be based on genuine security considerations, not creative taxation schemes disguised as national security policy," he 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." Back in July, Nvidia argued that tight export controls around their chip sales would cost the company an extra 5.5 billion US dollars (£4 billion). They have argued that such limits hinder US competition in a sector in one of the world's largest markets for technology, and have also warned that US export controls could end up pushing other countries toward China's AI technology. Commerce Secretary Howard Lutnick told CNBC in July that the renewed sale of Nvidia's chips in China was linked to a trade agreement made between the two countries on rare earth magnets. Restrictions on sales of advanced chips to China have been central to the AI race between the world's two largest economic powers, but such controls are also controversial. Proponents argue that these restrictions are necessary to slow China down enough to allow US companies to keep their lead. Meanwhile, opponents say the export controls have loopholes - and could still spur innovation. The emergence of China's DeepSeek AI chatbot in January particularly renewed concerns over how China might use advanced chips to help develop its own AI capabilities.
[44]
Beijing is putting pressure on Washington to loosen its grip on AI chips
As trade and technology tensions between China and the US intensify, Beijing is demanding an easing of US restrictions on strategic semiconductors, while accusing Nvidia's H20 chips of posing a risk to its national security. China wants the US to lift, or at least reduce, its restrictions on exports of high-bandwidth memory (HBM) chips, which are essential for artificial intelligence, reports the Financial Times. Beijing believes that these restrictions are hampering companies such as Huawei, while Washington cites the need to curb its advances in AI and defense. At the same time, Nvidia's H20 chips, designed for the Chinese market after the US restrictions of 2023, are being criticized by state media. An account affiliated with CCTV considers them to be underperforming, environmentally unfriendly, and potentially equipped with a "backdoor" allowing remote control. Nvidia, summoned by the Chinese Cyberspace Administration at the end of July, denies any security flaws. However, the US Department of Commerce has begun issuing licenses to Nvidia to export its H20 chips to China, a US official said on Friday. Between calls to ease US controls and suspicions about Nvidia, the Sino-US tech rivalry is intensifying. The US restrictions, which have been in place for several administrations, are hampering sales to one of the world's largest semiconductor markets, while remaining a major source of revenue for US manufacturers.
[45]
Klein: Nvidia, AMD Deal Doesn't Mean "Free-for-All" For Companies Selling to China
US President Donald Trump signaled on Monday that he'd be open to allowing Nvidia Corp. (NVDA) to sell a scaled-back version of its most advanced AI chip to China. Trump said he would consider a deal that would allow Nvidia to ship its Blackwell chips to China if the company could design it to be less advanced. "It's possible I'd make a deal" on a "somewhat enhanced in a negative way Blackwell" processor, he said in a briefing with reporters. "In other words, take 30% to 50% off of it." Jordan Klein, Managing Director at Mizuho Securities USA, tells Bloomberg Businessweek Daily that the policy change enables Nvidia to sell more chips.
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The Trump administration has ordered Nvidia and AMD to pay 15% of their AI chip sales revenue to China to the U.S. government. This unprecedented move comes as part of ongoing efforts to control advanced technology exports and maintain U.S. dominance in the AI sector.
In an unprecedented move, the Trump administration has ordered Nvidia and AMD to pay a 15% revenue share to the U.S. government on their AI chip sales to China. This decision comes as part of ongoing efforts to control advanced technology exports while allowing American companies to compete in the Chinese market 12.
Source: The Verge
Nvidia CEO Jensen Huang reportedly reached an agreement with President Donald Trump just days before the Commerce Department granted licenses to sell AI chips to China. The approved shipments include Nvidia's H20 and AMD's MI308, both stripped-down versions of their AI-focused GPUs designed to comply with U.S. export rules 1.
This revenue-sharing arrangement marks a significant shift in U.S. strategy, balancing national security concerns with economic interests. An Nvidia spokesperson stated, "We follow rules the U.S. government sets for our participation in worldwide markets," emphasizing the importance of maintaining America's competitiveness in the global AI technology stack 3.
The decision is set against the backdrop of an intensifying technological rivalry between the U.S. and China. Both superpowers are racing to build chip development capabilities while reducing dependencies on each other. This contest has led to historic subsidies, new export controls, and a scramble to onshore production 2.
Chris Miller, professor at Tufts University, notes, "We're definitely seeing more bifurcation in the chip industry, as China pours money into building a self-sufficient supply chain." However, China still relies heavily on imported chipmaking tools and materials, especially for high-end production 2.
Source: Reuters
President Trump has indicated the possibility of allowing Nvidia to sell cut-down versions of its latest Blackwell AI processors to Chinese entities. These chips, even with 30% to 50% reduced performance, would still significantly outperform currently available options in China 4.
This potential move has raised concerns among China hardliners who prefer stricter limitations on technology exports. However, it could prove financially beneficial for companies like Nvidia and AMD, allowing them to charge more for advanced hardware while contributing to U.S. government coffers 4.
Despite tightened restrictions, recent reports show Chinese companies obtained over $1 billion worth of Nvidia GPUs through smuggling in just three months. This has prompted discussions about embedding location-tracking technology directly into high-end chips to curb AI hardware smuggling 5.
Michael Kratsios, Director of the White House Office of Science and Technology Policy, confirmed that both software-based and physical tracking solutions are being considered. However, this approach faces technical and commercial hurdles, including potential increases in costs and new security vulnerabilities 5.
Source: Tom's Hardware
The semiconductor industry remains divided on the effectiveness of export controls. Nvidia CEO Jensen Huang has criticized U.S. chip restrictions as a "failure," warning that overregulation could accelerate China's domestic chip development 5.
As the largest global consumer of semiconductors, China's market remains crucial for U.S. companies. The country is expected to hold 30% of the world's global foundry production capacity by 2030, making it the world's largest hub of semiconductor production 2.
This evolving situation underscores the delicate balance between maintaining technological leadership and participating in the global market. As the U.S. and China continue their tech rivalry, the semiconductor industry finds itself at the center of a complex geopolitical and economic landscape that will shape the future of AI and computing technologies worldwide.
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