The two chip giants Nvidia and AMD have reportedly agreed to pay the 15% of Chinese revenue to the US government.
The unprecedented move came as the U.S. had previously banned the sale of powerful chips due to national security concerns.
According to some security officials who have previously served during the President Donald Trump's initial team has expressed deep concern while writing to the administration, “Nvidia’s H20 chip was a potent accelerator of China’s AI capabilities.”
Nvidia has told BBC, “We follow rules the US government sets for our participation in worldwide markets.”
The company further explained, “While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide.”
Initially, AMD did not respond to a request for the agreement. However, the President House has declined to comment.
The agreement was made that Nvidia will pay 15% of its revenues from H20 chip sales in China to the US government.
On the other hand, 15% of the revenue generated from sales of its MI308 chip in China to the Trump administration.
Primarily, the H20 chip was particularly developed for the Chinese market after the US restrictions were imposed by the Biden administration in 2023.
Beijing has faced criticism from the US government marking as “abusing export control measures and engaging in unilateral bullying.”
While the chief executive of Nvidia Jensen has spent months in making attempts successful from both sides for a resumption of sales of the chips in China.
The continuation of chip sales to China arises as the ongoing trade tensions escalate between Beijing and Washington.
Beijing has relaxed controls on rare earth exports whereas the US has imposed restrictions on chip design firms operating in China.
Meanwhile in May the two companies agreed to a 90-days agreement in their tariff war. The top officials have met on various occasions, and yet an agreement is yet to be extended and not confirmed ahead of an August 12 deadline.
Donald Trump has been prompting big companies to make big investments this year.
In this regard, Nvidia itself has announced plans to build AI servers in the US which are worth up to $500 billion, and marking its first step to build the first AI supercomputers which are American made.
Nvidia has generated $17 billion in revenue from China in the financial year ending January 26 representing 13% of total sales.
In addition, AMD has reported $ 6.2 billion in China revenue for 2024, accounting for 24% of total revenue.
