Nvidia strikes $3 billion revenue-sharing deal with Trump administration to resume AI chip sales in China
Tired of too many ads?
Remove Ads
Nvidia and AMD face criticism over China deal
Tired of too many ads?
Remove Ads
China's chip market and Nvidia's challenges
FAQs
Nvidia made a special deal with the Trump administration to keep selling chips to China. The deal means Nvidia will share up to $3 billion in revenue with the US government this fiscal year to sell its H20 chips in China.President Trump confirmed the deal on Monday, saying he granted export licenses to Nvidia in exchange for 15% of the China sales revenue. Trump called Nvidia CEO Jensen Huang 'a brilliant guy' during the announcement.Reports from multiple media outlets, including the Financial Times and Washington Post, said Nvidia and AMD made similar deals with Trump, citing unnamed sources. Some trade experts called the deal 'blackmail' and said it might violate the US Constitution's ban on export taxes, as per the report by Washington Post.Nvidia did not officially confirm the deal but said they follow US government rules and hope export controls allow them to compete in China and worldwide. Nvidia and AMD shares dropped slightly on Monday after the news. China is very important to Nvidia, making up 13% of its revenue last fiscal year, as stated by Yahoo Finance.Nvidia has tried selling lower-power chips to China due to tighter US export controls for national security reasons. Nvidia launched its H20 chips (based on Hopper technology) in 2024. In April, the Trump administration unexpectedly banned Nvidia from exporting H20 chips to China, causing Nvidia to lose billions and its stock to fall sharply. The export ban was lifted in July, but US lawmakers still worry about China's AI development.Wall Street expects Nvidia to recover $15 billion in lost sales in the second half of the year, reaching about $20 billion total revenue from China for fiscal year 2026. If the revenue reaches $20 billion, the US government could earn $3 billion from the deal (15% of sales).Analyst Stacy Rasgon from Bernstein said it's better for Nvidia and AMD to sell AI chips to China than to let Chinese companies like Huawei take over the AI market, as per the Yahoo Finance report.Huawei is a big Chinese tech company making chips to compete with Nvidia's H20 chips. Nvidia says US export controls might help Chinese rivals like Huawei to grow stronger. Currently, the revenue-sharing deal covers only Nvidia's H20 chips. (Trump's comment).In July, Nvidia also released new chips with its latest Blackwell architecture for the Chinese market.Analyst Rasgon expects China to start buying these new Blackwell-based chips from Nvidia as export rules allow. However, analyst Gil Luria from DA Davidson warns the deal could push China to rely more on domestic chipmakers like Huawei. Luria says China might not want to buy from US companies if they have to share money with the US government, according to the report by Yahoo Finance.Nvidia made the deal to get permission to sell its H20 AI chips to China while sharing part of the revenue with the US government.The US government could earn up to $3 billion from Nvidia's revenue-sharing deal based on 15% of the China sales.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
26 minutes ago
- Time of India
‘Blocking Grok from No.1': Musk threatens to sue Apple over ‘rigged' App Store, ‘favouring OpenAI'
'Blocking Grok from No.1': Musk threatens to sue Apple over 'rigged' App Store, 'favouring OpenAI' 'OpenAI is not for sale...': CEO Sam Altman rejects Elon Musk's offer, calls it 'ridiculous' TikTok returns to Apple's US App store after Trump delays ban; Hopeful for sale deal with China 'Not chomping at the bit to acquire TikTok': Elon Musk Apple to pay $95M to settle Siri lawsuit; apologises for saving user voices without consent Elon Musk Vs Sam Altman: Tech moguls clash over Trump-backed $500bn Stargate AI data centre project 'Totally hopeless to compete with us': Sam Altman's old video resurfaces and goes viral amid Deepseek's rise TikTok goes 'offline' for 170 mn users in US after Supreme Court upholds ban; Trump to decide fate
Time of India
26 minutes ago
- Time of India
‘Inflation beats market expectations again': White House touts CPI report amid Trump tariff showdown
The White House touted fresh economic data after US inflation remained stable in July. Press Secretary Karoline Leavitt said the latest Consumer Price Index (CPI) report shows inflation beating market expectations yet again, underscoring President Trump's commitment to lowering costs for American families and businesses. Show more Show less
Economic Times
26 minutes ago
- Economic Times
US move on BLA linked to its mining interests in Balochistan
Synopsis The U.S. designation of the Baloch Liberation Army as a Foreign Terrorist Organization strengthens Pakistan's position against Baloch activists and potentially paves the way for American mining firms to access rare earth deposits in Balochistan. This move, coinciding with increased US-Pakistan trade and high-level visits, could also impact China's economic interests in the region, particularly the China-Pakistan Economic Corridor. The move by the USA to declare Baloch Liberation Army (BLA) a Foreign Terrorist Organisation (FTO) not only strengthens Field Marshal Asim Munir's hands against Baloch political activists but can also facilitate the presence of American mining firms in Pakistan's biggest province that reportedly has rare earth and the USA, ever since the warming of ties under Trump 2.0, have held dialogues on mining Pakistan's rare earth. In fact, this has been one of elements that contributed to the strengthening of US-Pakistan ties over the past six it appears, may have convinced the Trump administration that controlling BLA is essential for harnessing "critical minerals" in the province. Critics argue that the USA may even put boots on the ground in Balochistan akin to Afghanistan but that might make the situation on the ground messy. Americans might be targets of locals who understand topography better and history may repeat itself like Afghanistan, according to diplomatic locals in Balochistan have repeatedly targeted Chinese-funded projects and engineers as they felt that Beijing has exploited the region without any benefits for locals and that their sovereignty is being compromised. China may welcome any action against BLA but it remains to be seen how it reacts to American commercial or security presence in Balochistan as that may impact the China Pakistan Economic Corridor passing through Balochistan. Gwadar port is also located in Balochistan. Observers are keeping a close watch if Pakistan, a current non-permanent member of the UNSC, moves the council armed with the US decision on BLA. It may be a rare occasion when both China and the USA support Pakistan on the issue in the council. However, BLA cannot be designated under the 1267 sanctions committee as it does not have links to Al Qaeda or associated US designation of BLA coincides with Munir's visit to Washington and follows a recent US-Pakistan trade agreement.
