Nvidia and AMD have agreed to pay the U.S. 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.

Washington

Nvidia and Advanced Micro Devices (AMD) have reportedly agreed to pay 15% of their revenues from semiconductor sales in China to the U.S. government in exchange for export licenses. This arrangement follows meetings between Nvidia's CEO and U.S. officials, and comes after previous restrictions on chip exports to China were eased.

The deal is considered controversial due to ongoing concerns about national security and the potential for American AI technology to be used by China. While the agreement could generate significant revenue for the U.S. government, questions remain about its effectiveness and the security of the chips, as Chinese state media have raised concerns about possible backdoors.

Nvidia and AMD to pay 15% of China revenues to U.S. government

Artificial intelligence chip makers NVIDIA and Advanced Micro Devices have reportedly cut a highly unusual deal with the Trump administration. According to the Financial Times, both companies have agreed to pay 15% from their revenues from semiconductor sales in China to the U.S. government in exchange for an export license. CNN tech reporter Claire Duffy is joining us from New York. So, Claire, apparently this deal was apparently cut last week as the U.S. officials were working to reach a trade agreement with China. Just walk us through the details of what we know about it now. Yeah, Christina, so NVIDIA CEO Jensen Huang met with Trump at the White House last week. This comes after the company said last month that it would resume sales of its H20 AI chip to China because the White House had agreed to ease export restrictions. And you'll remember that the H20 is the chip that NVIDIA released last year in an effort to maintain access to the Chinese market because of export controls that the Biden administration had put in place. The Trump administration then decided this year to crack down on sales of those chips. But as you said, the companies, both NVIDIA and AMD, have reportedly agreed to pay 15% of their chip sales to China to the White House in exchange for those export licenses to resume sales there. This is a deal that could net billions of dollars for the White House, but it's unclear if it's going to be successful because the Chinese have raised concerns about the security of these chips. In particular, a social media account linked to Chinese state media claimed yesterday that there could be backdoors built into these American AI chips. But of course, the companies have denied those allegations, Christina. Yeah, and on that issue of national security concerns, one analyst compared it to selling F-35 jets to China for a 15% commission. So the concern runs both ways. Is that why this is being seen as so controversial? I think from the American side, there are big questions about what exactly the Trump administration is trying to accomplish here. These export restrictions were put in place ostensibly because of national security concerns. There are big worries on Capitol Hill about China getting too far ahead of the US in artificial intelligence, given the economic implications, the military implications of this technology. And there have also been big questions surrounding the H20 in particular, which is believed to have contributed to the Chinese AI model deep seek that really shocked the US earlier this year when it was released. And so, I think there is a question about whether those concerns just go away if the White House is making a 15% commission on these chip sales. Although I will say, Nvidia CEO Jensen Huang has said it's important for US national security that the companies continue to sell into China because otherwise, Chinese rivals will start to develop their own versions of the technology. All right. Claire, we'll see where this goes. Thank you very much for now.

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