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Chip giants Nvidia and AMD to pay 15% of China revenue to US Nvidia and AMD to pay 15% of China chip sales to US government
(about 3 hours later)
Nvidia CEO Jenson Huang reportedly met President Trump last week Nvidia boss Jenson Huang reportedly met President Trump last week
Chip giants Nvidia and AMD have agreed to pay the US government 15% of their semiconductor sales in China, the BBC has been told by a source close to the matter. Chip giants Nvidia and AMD have agreed to pay the US government 15% of Chinese revenues as part of an "unprecedented" deal to secure export licences to China, the BBC has been told.
The agreement is part of a deal to secure export licences to the world's second biggest economy. The US had previously banned the sale of powerful chips used in areas like artificial intelligence (AI) to China under export controls usually related to national security concerns.
"We follow rules the US government sets for our participation in worldwide markets. While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide," Nvidia told the BBC. Security experts, including some who served during President Donald Trump's first term, recently wrote to the administration expressing "deep concern" that Nvidia's H20 chip was "a potent accelerator" of China's AI capabilities.
AMD did not immediately respond to a request for comment. Nvidia told the BBC: "We follow rules the US government sets for our participation in worldwide markets."
In a statement to the BBC, Nvidia also said: "America cannot repeat 5G and lose telecommunication leadership. America's [artificial intelligence] tech stack can be the world's standard if we race." It added: "While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide."
Under the agreement, Nvidia will pay 15% of its revenues from H20 chip sales in China to the US government, while AMD will give the same percentage from its MI308 chip revenues, which was first reported by the Financial Times. AMD did not immediately respond to a request for comment. The White House declined to comment.
Charlie Dai, vice president and principal analyst at global research firm Forrester, said this agreement is "unprecedented". Under the agreement, Nvidia will pay 15% of its revenues from H20 chip sales in China to the US government.
"The arrangement underscores the high cost of market access amid escalating tech trade tensions, creating substantial financial pressure and strategic uncertainty for tech vendors", he added. AMD will also give 15% of revenue generated from sales of its MI308 chip in China to the Trump administration, which was first reported by the Financial Times.
Washington has previously banned the sale of Nvidia's H20 chips to Beijing over security concerns, although the firm recently announced that this would be reversed. These powerful chips are used in artificial intelligence applications (AI). The H20 chip was developed specifically for the Chinese market after US export restrictions were imposed by the Biden administration in 2023. Its sale was effectively banned by Trump's government in April this year.
"You either have a national security problem or you don't," said Deborah Elms, head of trade policy at the Hinrich Foundation.
"If you have a 15% payment, it doesn't somehow eliminate the national security issue," Ms Elms told the BBC.
The H20 chip was developed specifically for the Chinese market after US export restrictions were imposed by the Biden administration in 2023. Its sale was effectively banned by the Trump administration in April this year.
Nvidia's chief executive Jensen Huang has spent months lobbying both sides for a resumption of sales of the chips in China. He reportedly met US President Donald Trump last week.Nvidia's chief executive Jensen Huang has spent months lobbying both sides for a resumption of sales of the chips in China. He reportedly met US President Donald Trump last week.
"You either have a national security problem or you don't," said Deborah Elms, head of trade policy at the Hinrich Foundation.
"If you have a 15% payment, it doesn't somehow eliminate the national security issue," she added.
In a letter last month to US Commerce Secretary Howard Lutnick, a group of 20 security specialists said that while the biggest buyers of Nvidia's H20 chips were civilian companies in China, they expect them to be used by the military.
They wrote: "Chips optimized for AI inference will not simply power consumer products or factory logistics; they will enable autonomous weapons systems, intelligence surveillance platforms and rapid advances in battlefield decision-making."
In a statement to the BBC, Nvidia said: "America cannot repeat 5G and lose telecommunication leadership. America's AI tech stack can be the world's standard if we race."
Charlie Dai, vice president and principal analyst at global research firm Forrester, said the agreement to hand over 15% of China chip sales to the US government in exchange for export licences was "unprecedented".
"The arrangement underscores the high cost of market access amid escalating tech trade tensions, creating substantial financial pressure and strategic uncertainty for tech vendors," he added.
The resumption of chip sales to China comes as trade tensions between Beijing and Washington have been easing.The resumption of chip sales to China comes as trade tensions between Beijing and Washington have been easing.
Beijing has relaxed controls on rare earth exports, while the US has lifted restrictions on chip design software firms operating in China.Beijing has relaxed controls on rare earth exports, while the US has lifted restrictions on chip design software firms operating in China.
In May, the world's two biggest economies agreed to a 90-day truce in their tariffs war.In May, the world's two biggest economies agreed to a 90-day truce in their tariffs war.
Since then, top trade officials from both sides have met on a number of occasions, although an agreement to extend the tariffs pause has not yet been confirmed ahead of a 12 August deadline.Since then, top trade officials from both sides have met on a number of occasions, although an agreement to extend the tariffs pause has not yet been confirmed ahead of a 12 August deadline.
Earlier, the Financial Times reported that China called on the US to relax export controls of semiconductors as part of any potential tariffs deal.
As part of his trade policy, Trump has put pressure on major companies to make more investments in the US.As part of his trade policy, Trump has put pressure on major companies to make more investments in the US.
Last week, Apple said it would invest another $100bn (£74.4bn) in the country, adding to a previous pledge to spend $500bn in the US over the next four years.Last week, Apple said it would invest another $100bn (£74.4bn) in the country, adding to a previous pledge to spend $500bn in the US over the next four years.
In June, memory chip maker Micron Technology said its planned US investments will total $200bn. That includes construction of a new manufacturing facility in Idaho.In June, memory chip maker Micron Technology said its planned US investments will total $200bn. That includes construction of a new manufacturing facility in Idaho.
Nvidia itself has announced plans to build AI servers in the US worth up to $500bn, pledging to build the first AI supercomputers that are entirely American-made.Nvidia itself has announced plans to build AI servers in the US worth up to $500bn, pledging to build the first AI supercomputers that are entirely American-made.
Meanwhile, the Wall Street Journal reported that the boss of Intel will meet with Trump at the White House after the president called for his immediate resignation due to his ties to China.
Last week, Trump said on social media that Lip-Bu Tan was "highly conflicted", apparently referring to his alleged investments in companies that the US said were tied to the Chinese military.
Mr Tan pushed back, stating it was "misinformation".