Nvidia & AMD May Sell AI Chips to China with Revenue Sharing

AI Chip Sales to China Subject to New Revenue Sharing Agreement

The discussion surrounding the competition in the artificial intelligence chip sector has shifted, moving beyond concerns of U.S. national security to now encompass the implementation of tariffs. Nvidia and AMD have reportedly reached an agreement with the U.S. government.

This agreement stipulates that both companies will remit 15% of their revenue generated from sales of advanced AI chips to China. In return, they will receive the necessary licenses to continue selling these chips within the Chinese market, as reported by the Financial Times, referencing unnamed sources.

Details of the Revenue Sharing Plan

The Financial Times’ source indicates that Nvidia will be sharing revenues derived from sales of its H20 AI chips in China. Similarly, AMD will contribute a portion of the revenue from its MI308 chip sales.

Alongside this revenue-sharing arrangement, the U.S. government has begun issuing licenses authorizing the sale of chips from both companies. This allows for continued commerce while ensuring government oversight.

Historical Context of Restrictions

Initially, the Trump administration imposed restrictions in April on the sale of specific high-performance AI inference chips to China. However, this ban was temporarily suspended a few months later.

This pause occurred after Nvidia pledged to invest up to $500 billion in U.S. data center infrastructure. Subsequently, in July, the company announced its intention to resume sales of its H20 AI chips to China.

These H20 chips were specifically engineered for sale within China, following restrictions enacted by the Biden administration.

Official Statements and Trade Discussions

Nvidia affirmed its commitment to adhering to U.S. government regulations concerning its participation in global markets. A spokesperson stated, “While we haven’t shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide.”

U.S. Commerce Secretary Howard Lutnick connected Nvidia’s shift in strategy to ongoing trade negotiations with China. These discussions center around rare-earth elements, which are crucial for manufacturing components like electric vehicle batteries.

Criticism of the Decision

The administration’s approval of Nvidia’s H20 chip sales has faced opposition. National security specialists and former government officials recently sent a letter to Lutnick, urging a reversal of this decision.

Their concerns highlight the potential security implications of allowing the sale of advanced AI technology to China.

Note: This story was updated to include a statement from Nvidia.

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