In unusual move, US to take cut of AI chips sold to China
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Nvidia and Advanced Micro Devices are expected to pay the US 15% of the money they take in from selling artificial intelligence chips to China, as part of a highly unusual financial agreement with the Trump administration.
The deal, which was described by three people familiar with the agreement who spoke anonymously, comes a month after Nvidia received permission to sell a version of its artificial intelligence chips to China. While the Trump administration publicly said a month ago that it was giving the green light to Nvidia to sell an AI chip called H20 to China, it did not actually issue the licenses making those sales possible. The deal could funnel more than $2 billion to the US govt.
President Trump confirmed the terms of the unusual arrangement in a Monday press conference while noting that he originally wanted 20% of the sales revenue when Nvidia asked to sell the "obsolete" H20 chip to China. The president credited Nvidia CEO Jensen Huang for negotiating him down to 15%. "So we negotiated a little deal. So he's selling a essentially old chip," Trump said.
Last week, Jensen Huang, Nvidia's CEO, met with President Trump at the White House and agreed to give the federal govt its 15% cut, essentially making the federal govt a partner in Nvidia's business in China, said the people familiar with the deal.
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The commerce department began granting licenses for AI chip sales two days later, these people said. Though Huang has led negotiations with the White House, Nvidia isn't the only company that sells AI chips to China.
AMD has an AI chip called the MI308 and in April the Trump govt also banned sales of it to the Chinese.
There are few precedents for the commerce department agreeing to grant licenses for exports in exchange for a share of revenue. But the unorthodox payments are consistent with Trump's interventionist role in international deals involving US firms.
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