**Nvidia and AMD Strike Deal with Trump Administration for AI Chip Sales to China**
Nvidia has reached an agreement with the Trump administration that allows the company to sell certain artificial intelligence (AI) chips to China, provided it pays 15% of the revenue from these sales to the US government. Advanced Micro Devices (AMD) has also joined this arrangement for some of its chips, marking a significant step towards preserving America’s leadership in AI while establishing a crucial trade relationship with China.
This new agreement comes after a previous ban on exporting specific chips, including Nvidia’s H20 and AMD’s MI308, which was part of a broader strategy to curb China’s advancements in AI and maintain the technological superiority of the United States, as reported by CNN.
Under the terms of the deal, both Nvidia and AMD will remit a 15% commission to the US government on the revenue generated from their sales of these “less advanced” AI chips in China. This arrangement effectively paves the way for the companies to secure the necessary export licenses that had previously been denied. However, the deal permits only the export of Nvidia’s H20 chips, which Trump described as “obsolete,” noting that China already possesses similar technology in different forms.
Initially, Trump sought a 20% cut, but this was negotiated down to 15% during a recent meeting with Nvidia CEO Jensen Huang at the White House. Nvidia introduced the H20 chip last year to maintain access to the Chinese market, while the company also has more powerful chips in its lineup, including the H100 and H200 series, as well as the advanced Blackwell series.
The administration’s decision is seen as a recognition that China is progressing in AI despite US restrictions. It suggests that it may be more beneficial for American companies to engage with the Chinese market rather than forcing China to develop its own alternatives or resort to illicit channels for chip acquisition. This approach could also provide the US government with additional revenue, complementing existing tariffs and potentially generating billions for public spending.
Nvidia’s Huang has argued that restricting the sale of American AI chips could jeopardize US national security, as Chinese developers might create their own alternatives, undermining US leadership in the field.
Despite this new strategy, concerns linger regarding the H20 chips previously exported to China, which are believed to have contributed to the development of DeepSeek, an advanced Chinese AI model that raised alarms in Silicon Valley earlier this year, indicating that China may be further ahead in AI than previously thought.
For Nvidia, this deal represents a crucial opportunity, as the Chinese market is vital for its growth and innovation in the AI sector.
**FAQ**
**What is the significance of the Nvidia and AMD deal with the Trump administration?**
The deal allows Nvidia and AMD to sell certain AI chips to China while paying a commission to the US government, helping maintain US competitiveness in AI and fostering trade relations with China.
