US semiconductor giants Nvidia and Advanced Micro Devices have agreed to pay the United States government 15 percent of their revenue from selling artificial intelligence chips to China, according to media reports Sunday.
Nvidia CEO Jensen Huang met with US President Donald Trump at the White House on Wednesday 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.
According to the Financial Times, the artificial intelligence chips that are part of the agreement with the US government are Nvidia’s “H20” and the “MI308” from Advanced Micro Devices (AMD).
Nvidia did not deny the reported deal when approached for comment.
“We follow rules the U.S. government sets for our participation in worldwide markets,” a spokesperson told AFP.
“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 spokesperson added: “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 inquiries for comment.
Investors are betting that AI will transform the global economy, and Nvidia — the world’s leading semiconductor producer — last month became the first company ever to hit $4 trillion in market value.
The California-based 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.
The US has been restricting which chips Nvidia can export to China on national security grounds.
‘Political tariff’
Nvidia said last month that Washington had pledged to let the company sell its H20 chips to China, which are a less powerful version that the tech giant specifically developed for the Chinese market.
The Trump administration had not issued licenses to allow Nvidia to sell the chips before the reported White House meeting.
On Friday, however, the Commerce Department started granting the licenses for chip sales, the reports said.
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.
The deal could earn the US government more than US$2 billion, according to the New York Times report.
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.
