American semiconductor manufacturers Nvidia and AMD have agreed to pay 15 percent of their revenues from chip sales in China to the US government. The arrangement is the condition for obtaining export licenses under President Donald Trump’s administration.
According to sources familiar with the situation, including a US government official, both companies approved the financial arrangement to obtain export licenses for the Chinese market, which were granted last week.
The American official stated that Nvidia agreed to share 15 percent of revenues from H20 chip sales in China, while AMD will provide the same percentage from MI308 chip revenues. The Trump administration has not yet decided how the money will be used, reports Financial Times.
Never seen before
According to export control experts, this is the first time ever that an American company has agreed to pay a portion of its revenues to obtain export licenses. However, the arrangement fits into a pattern under the Trump administration where the president urges companies to take actions, such as domestic investments, to avoid tariffs.
The Commerce Department began issuing H20 export licenses on Friday, two days after Nvidia CEO Jensen Huang met with President Trump. The administration has also begun issuing licenses for AMD’s chips to China.
Nvidia did not deny the arrangement and said: “We follow rules the US government sets for our participation in worldwide markets”. AMD commented: “Our initial licence applications have been approved” and added that the company “adhere to all US export control laws and policies”.
Criticism from security experts
The decision to sell the chips to China has drawn criticism from American security experts who argue that the H20 chip will help the Chinese military and undermine US strength in artificial intelligence.
— Beijing must be gloating to see Washington turn export licences into revenue streams, says Liza Tobin, a China expert who served on the National Security Council during Trump’s first administration.
In a letter to Commerce Secretary Howard Lutnick, Matt Pottinger, former deputy national security advisor, and 19 other security experts warned against granting H20 licenses. They called the H20 a “potent accelerator of China’s frontier AI capabilities”.
Nvidia dismissed the criticism as “misdirected” and rejected that China could use the H20 for military purposes.
The debate comes as the US and China hold trade talks that Trump hopes will pave the way for a summit with Chinese President Xi Jinping.
