Nvidia and AMD will give US 15% of China sales. But Chinese state media warns about their chips
CNN
By Simone McCarthy, Phil Mattingly, CNN
Hong Kong (CNN) — Nvidia and AMD have agreed to pay the US government 15% of their revenues from semiconductor sales to China in exchange for export licenses, an unprecedented quid pro quo arrangement aimed at solidifying America’s AI business dominance while maintaining trade ties with China.
The deal with the Trump administration allows the companies to obtain export licenses to sell Nvidia’s H20 chips and AMD’s MI308 chips in China, a US official told CNN. The Financial Times first reported the story Sunday.
The deal came together after Nvidia CEO Jensen Huang met with President Donald Trump on Wednesday, the official said. Although the export licenses were granted Friday, no shipments have yet been made. It’s still unclear how the deal will be structured, but the White House may use its recent trade agreements as a template.
“We follow rules the US government sets for our participation in worldwide markets,” a Nvidia spokesperson said in a statement. “While we haven’t shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide.”
Trump calls the chips ‘obsolete’
Trump said Monday that the AI chips he approved for sale to China are “obsolete,” but he left open the possibility that Nvidia could export its super high-end Blackwell chips for a higher price.
“The chip that we’re talking about, the H20, it’s an old chip,” Trump said at a press conference Monday. “China already has it in a different form, different name, but they have it.”
Trump said Huang, who met with the president Wednesday, wanted to sell the H20 AI chip to China after the Trump administration expressed openness to lifting its export ban on the technology. But Trump demanded payment to the US government in exchange for the export license.
At first, Trump said he wanted Nvidia to pay the US government 20% of sales of its AI chips exported to China, but they negotiated a rate of 15%.
“I said, if I’m going to do that, I want you to pay us, as a country, something, because I’m giving you a release,” Trump said.
The H20 is a sophisticated AI processor, although it is not Nvidia’s highest-end processor. The Blackwell chip is significantly more advanced, and the Trump administration has closed the door on the export of that technology to China — even after reversing course on the H20.
However, Trump on Monday said that he’d consider allowing Nvidia to sell the Blackwell chip if Nvidia pays the US government an even steeper cost.
“The Blackwell is superduper advanced. I wouldn’t make a deal with that, although it’s possible,” Trump said. “I’d make a deal – a somewhat enhanced in a negative way. Blackwell, in other words, take 30% to 50% off of it, but that’s the latest and the greatest in the world. Nobody has it. They won’t have it for five years.”
Trump said Huang will return to the White House in the future to discuss selling an “unenhanced” version of Blackwell.
“I think he’s coming to see me again about that, but that will be a unenhanced version of the big one,” Trump said. “You know, we will sometimes sell fighter jets to a country and we’ll give them 20% less than we have.”
China may not accept the chips
The AI chips are in extremely high demand and the arrangement could raise billions of dollars for the US government. But it’s unclear how successful the venture will be, because China may not be willing to play ball: Nvidia’s H20 chips pose security concerns for China, a social media account linked to Chinese state media said Sunday, as Washington and Beijing near a deadline to strike a deal in trade negotiations in which technology has also emerged as a key issue.
China could choose not to buy US tech firm Nvidia’s H20 chips, said the account, Yuyuan Tantian, which is affiliated with state broadcaster CCTV, as it claimed that the artificial intelligence (AI) chips could have “backdoors” that impact their function and security.
“When a type of chip is neither environmentally friendly, nor advanced, nor safe, as consumers, we certainly have the option not to buy it,” said the commentary, which came after China’s cybersecurity administration also raised concerns over backdoor access in those chips.
Nvidia has repeatedly denied that its products have backdoors.
Trade friction
China’s access to American technology, especially high-end chips that can be used in the development of artificial intelligence, has become a key issue in trade and tech frictions between the rival economies – as both vie for tech dominance.
A trade truce between the two countries that reduced triple-digit tariffs is set to expire on August 12, though officials have signaled an extension could come into effect following talks in Sweden last month.
Nvidia last month said it would resume sales of the H20 chip to China after the White House changed course on export controls it imposed in April as its trade frictions with China deepened. US Treasury Secretary Scott Bessent told Bloomberg in an interview at the time that the Nvidia export controls have been a “negotiating chip” in the larger US-China trade talks.
Nvidia released the H20 chip last year to maintain access to the Chinese market following strict export controls put in place under the Biden administration that stopped the export of chips with greater processing power.
Nvidia’s announcement last month that it would be able to export the H20 chip to China raised concerns among some US lawmakers, who support tight controls to prevent China from using American technology to advance its military and AI systems.
Trump administration have correctly said that the H20 chips aren’t the top-of-the-line AI chips that can build large language models. As a result, the White House has been willing to open up the market for those chips to maintain US business dominance in AI – without giving up the cream-of-the-crop chips to China, which administration officials say could still pose a national security threat.
China’s mounting concern about the security of the chips comes after the White House last month recommended implementing export controls that would verify the location of advanced artificial intelligence chips. China’s cyberspace regulator late last month summoned Nvidia over security concerns about “tracking and positioning” and “remote shutdown” capabilities.
In a blog post published last week, Nvidia reiterated that its chips did not have back doors, spyware or kill switches and said that “embedding backdoors and kill switches into chips would be a gift to hackers and hostile actors.”
China’s security concerns appear to mirror those that the US has in the past expressed about Chinese technology, most prominently the first Trump administration’s campaign against the growing foothold of Chinese tech giant Huawei in global communications infrastructure.
Chinese leaders have also pushed for the country’s tech firms to become self-sufficient and reduce reliance on American-made chips to achieve Beijing’s AI and tech ambitions, and experts have said that controls on chips like the H20 could push China to speed up its own innovation.
But the H20 is not the only technology that reports suggest is entangled with negotiations between the two sides.
According to another report from the FT also published Sunday, China wants the US to ease export controls on a critical component for artificial intelligence chips as part of a trade deal ahead of a possible summit between President Donald Trump and Chinese leader Xi Jinping.
Chinese officials have told experts in Washington that Beijing wants the Trump administration to relax export restrictions on high-bandwidth memory (HBM) chips, the FT reported, citing several people familiar with the matter.
The US government imposed export controls on the sale of such memory chips to China last year.
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CNN’s Nectar Gan contributed to this report.
