The U.S. government is getting a cut from Nvidia and AMD's AI chip sales to China
Is "national security" up for sale?
The AI chip race narrative used to be about one thing: U.S. national security.
Nvidia's chips were once described as a “potent accelerator of China’s frontier AI capabilities” and, if in the wrong hands, a potential tool for the Chinese military advancement.
But now, it seems even national security has a price.
In a development that shifts the entire conversation, the Financial Times reports that Nvidia and AMD have agreed to pay the U.S. government 15% of the revenue they earn from selling high-end AI chips to China, in exchange for licenses to sell them there.
As part of the agreement, Nvidia will share revenues from sales of its H20 AI chips in China, and AMD will share a cut of MI308 chip sales. The government has also started issuing licenses for the sale of the two companies’ chips, the report said.
President Trump confirmed the arrangement in a press briefing Monday. “We negotiated a little deal,” he told reporters, calling Nvidia CEO Jensen Huang “a brilliant guy.”
For Nvidia, that means sharing as much as $3 billion with the U.S. government this fiscal year alone, in order to resume the sales of its H20 chips in China.
Loy Okezie
How We Got Here – From Biden’s Ban to Trump’s Trim
But what we’re seeing now is essentially a repeal of years of restrictions on chip exports that began under the Biden administration and continued into Trump's administration. Those restrictions were meant to keep the most advanced AI training hardware out of China’s hands and prevent boosting its military AI programs.
The Biden administration first imposed sweeping export controls in October 2022 to block China from obtaining the most advanced AI chips and manufacturing equipment.
