Nvidia and AMD Eye Chinese Market for AI Chips with US Revenue Cut

Nvidia and AMD have entered an agreement to pay 15% of their revenue from high-end AI chip sales to China to the U.S. government, in exchange for licenses to sell these chips in the country, as per reports from the Financial Times, citing anonymous sources.

The agreement allows Nvidia to sell its H20 AI chips, while AMD will share its revenue from MI308 chip sales in China. These licenses mark a significant development as the government begins issuing permissions for these transactions.

Initially, the Trump administration restricted high-performance AI inference chip sales to China in April. However, following Nvidia’s commitment to invest up to $500 billion in U.S. data centers, the ban was paused. Subsequently, Nvidia announced it would resume Chinese sales of its H20 AI chips, specifically designed to meet U.S. export restrictions.

An Nvidia spokesperson commented, "We adhere to the rules set by the U.S. government for our operations in global markets. Although we haven’t shipped H20 to China in months, we are hopeful that export regulations will enable America to compete globally, including in China."

U.S. Commerce Secretary Howard Lutnick revealed that Nvidia’s strategic pivot was linked to trade discussions with China over rare-earth elements, essential for manufacturing components like EV batteries.

Despite the commercial benefits, the decision to approve Nvidia’s H20 chips has faced opposition. National security experts and former governmental officials have urged the administration to reconsider.