US to Take 15% Cut of Nvidia, AMD China Chip Sales: Reports

Chip-makers Nvidia as well as AMD have agreed to give the US government 15% of revenue from sales to China of advanced computer chips like Nividia's H20 chips which are used for artificial intelligence applications.

As part of an unusual arrangement, the two chip-makers have agreed to the financial arrangement as a condition for obtaining export licences for the Chinese market that were granted last week, a Financial Times (FT) report said.

Sale Of H20 Chips Halted

The President of the United States, Donald Trump's administration had halted the sales of H20 chips to China in April, but Nvidia announced last month that the US said that it would allow the company to resume sales and it hoped to start deliveries soon.

Yet another US official on Friday said that the Commerce Department had begun issuing licenses for the sale of H20 chips to China.

On being asked on whether Nvidia had agreed to pay 15% of revenues to the US, a spokesperson said in a statement, "We follow rules the US government sets for our participation in worldwide markets."

The FT report further added that AMD did not respond to a request for comments on this topic, neither did the US Department of Commerce or China's foreign ministry.

China's Chip Sales Revenue

China is a significant market for both the companies.

Nvidia had generated $17 billion in revenue from China in the fiscal year ending January 26, which represents 13% of the total sales.

AMD also reported $6.2 billion in China revenue for 2024, which accounts for 24% of the total revenue.

According to the FT report, the chipmakers agreed to the arrangement as a condition for obtaining the export licences for their semiconductors, including AMD's MI308 chips. The report said the Trump administration had yet to determine how to use the money.

Geoff Gertz, a senior fellow at Center for New American Security, which is an independent think tank in Washington, DC, said, "it's wild," adding, "Either  selling H20 chips to China is a national security risk, in which case we shouldn’t be doing it to begin with, or it’s not a national security risk, in which case, why are we putting this extra penalty on the sale?"

US Negotiations With China To Get Rare Earths

According to the US Commerce Secretary Howard Lutnick, the planned resumption of sales of the AO chips was part of US negotiations with China to get rare earths and described the H20 as Nvidia's "fourth-best chip" in an interview with CNBC.

Lutnick added that it was in the interest of the US to have Chinese companies using American technology, even if the most advanced was prohibited from export, so they continued to use an American "tech stack."

While the US official said that the Trump administration did not feel the sale of H20 and equivalent chips was compromising US national security, it is still not known when the agreement would be implemented or exactly how it would be implemented, but the administration will be in compliance with the law.

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