Nvidia and AMD will give 15% of their profits from chip sales in China to the US government
Aug 11 (Reuters) – U.S. President Donald Trump suggested on Monday he could allow Nvidia (NVDA.O) to sell a scaled-down version of its next-generation advanced GPU chip to China, opening a new tab, despite deep fears in Washington that China could use U.S. artificial intelligence to its military capabilities.
The move could open the door for China to obtain more advanced computing power from the U.S., critics said.
Nvidia and AMD will give 15% chip sales in China
“Jensen (Huang, Nvidia CEO) also has a new chip, 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 reducing the chip’s computing power.
“I think he’s coming to see me again about it, but it’s going to be an unenhanced version of the big one,” he added.
Earlier, the Trump administration confirmed an unprecedented deal with Nvidia and AMD (AMD.O), which opens a new tab to give the U.S. government 15% of revenue from sales of some advanced chips to China.
The move sent shivers throughout Washington, where China hawks from both parties have long sought to keep Beijing firms behind in U.S. AI technology.
“Even with scaled-down versions of the flagship Nvidia (chips), China can afford to buy and spend enough of them to build world-leading, frontier-scale AI supercomputers,” said Saif Khan, a former director of technology and national security on the White House National Security Council under former President Joe Biden, who heavily restricted U.S. AI chip exports abroad. “This would allow China to leapfrog America in AI capabilities.”
The most advanced chip Nvidia is currently allowed to sell to China is the H20, which is based on Nvidia’s older Hopper architecture platform. The U.S. AI chip company announced its latest Blackwell platform in early 2024.
Reuters reported in May that Nvidia was preparing a new chip for China that is a significantly lower-cost variant of its most recent state-of-the-art AI Blackwell chips.
Nvidia has not disclosed the existence of the chip or its capabilities compared to its U.S. offering. But the flagship U.S. version of the Blackwell chip, which Nvidia unveiled in March, is 30 times faster than its predecessor.
China’s Foreign Ministry did not immediately respond to a request for comment on Tuesday about Trump’s approval of the sale of a version of the next-generation AI chips.
Obsolete
Trump on Monday defended the agreement for Nvidia and AMD to give the U.S. government 15% of revenue from sales to China, after his administration last month green-lighted the export of less advanced AI chips to China, known as H20.
Nvidia developed the H20 to comply with restrictions imposed by the previous Biden administration and began selling the chip to China in 2024.
In April, the Trump administration blocked Nvidia from selling the chips to China. But the company said last month it had received approval to resume shipments and hopes to begin deliveries soon.
“The H20 is outdated,” Trump said Monday, adding that China already has it. “So I said, ‘Listen, if I’m going to approve this for you, for the country, I want 20%.’”
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 relationship with Intel INTC.O.’s new CEO.
The U.S. Commerce Department has begun issuing licenses for the sale of H20 chips to China, a U.S. official said on Friday. Washington does not believe the sale of H20 and similar chips compromises national security, a second U.S. official told Reuters on Sunday.
The second official did not say when or how the agreements with the chip companies would be implemented but said the administration would comply with the law.
When asked if Nvidia agreed to pay the U.S. 15% of revenue, a company spokesperson said: “We comply with the U.S. government’s established rules for our participation in global markets.”
The spokesperson added, “While we have not shipped H20 to China for months, we hope that export control rules will allow the U.S. to compete in China and around the world.”
An AMD spokesperson said the U.S. has 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 complies with all U.S. export controls.
China’s Foreign Ministry said on Monday that 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 control and suppress China.”
Reporting by Karen Freifeld in New York; Additional reporting by Arshiya Bajwa, Yazini MV and Gyaneshwar Rajan in Bengaluru, Liam Mo and Che Pan in Beijing, Trevor Honeycutt, Ryan Jones and Alexandra Alper in Washington and Stephen Nellis in San Francisco, Brenda Goh in Shanghai; Editing by Kenneth Lee, Sayantani Ghosh, Marguerita Choy, Matthew Lewis and Christian Schmollinger
