Trump vs China: How Nvidia Became the Flashpoint in the Global Semiconductor Battle – 5 Key Facts

The semiconductor manufacturer Nvidia has brokered a deal with the Trump administration which is going to permit the chipmaker to sell specific artificial intelligence (AI) chips to China in exchange for praying 15% of its revenue from those sales to the US government.

The chipmaker Advanced Micro Devices (AMD) has also signed this deal for some of its chips, which is a step towards maintaining America's dominance in the sphere of AI, while securing a critical trade agreement with China.

What Is This Agreement?

Nvidia as well as AMD will pay the US government a 15% commission on the revenue generated from their sales of these "less advanced" AI chips in China. This agreement provides a path for the companies to obtain the necessary export licenses, which were blocked.

According to this deal, the export of Nvidia's H20 chips is only allowed, to which Trump said that the H20 chip is "obsolete," adding that China "already has it in a different form."

The agreement also follows an earlier ban on the export of certain chips, including Nvidia’s H20 and AMD’s MI308, which was part of a broader effort to slow China’s progress in AI and maintain the US's technological edge, as per a report by CNN.

What Does Trump Want?

While Trump was initially looking for a 20% cut, the rate was reportedly negotiated down to 15% during a meeting with Nvidia CEO Jensen Huang last week at the White House.

Nvidia also released the H20 chip last year as a way to maintain access to the Chinese market. The company has a line of far more powerful chips, which include the H100 and H200 series chips, as well as its "super-advanced" Blackwell line of chips.

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