The AI chip racing story once revolved around US national security, but now it is about tariffs. NVIDIA and AMD have agreed to pay the US government 15% of the revenue from sales to China in exchange for a license to sell these chips in the country.
According to FT’s government sources, NVIDIA shares revenue from sales of H20 AI chips in China, while AMD shares cuts in MI308 chip sales. The government has also begun issuing licenses for the sale of chips for both companies, the report said.
The Trump administration in April had restricted the sale of certain high-performance AI inference chips to China, but suspended the ban months later when Nvidia promised to compensate for data center investments worth up to $500 billion. Then in July, the company said it would resume selling H20 AI chips to China. It was specifically designed domestically following restrictions by the Biden administration.
“We will follow the rules that the US government sets for participation in the global market,” an Nvidia spokesperson said in an email. “We haven’t shipped H20 to China for months, but we hope that export control rules will allow us to compete with the US all over the world.”
According to U.S. Secretary of Commerce Howard Luttonick, the changes to Nvidia’s course were related to trade debates with China over rare earth elements needed to make components such as rechargeable batteries for electric vehicles.
Critics have been found at the administration’s decision to approve the sale of Nvidia’s H20 chips. National security experts and former government officials wrote a letter to Lutnick last month, urging the government to reverse the course.
Note: This story has been updated to add an Nvidia statement.
