NVIDIA, AMD To Pay 15% Of Chinese H20 And MI308 AI Chip Sales To US Gov’t
AMD and NVIDIA have reportedly agreed to pay the United States government 15% of all revenues derived from AI chip sales to China, thereby giving the green light for the former to begin shipping Instinct MI308 accelerators and the latter its Hopper H20 silicon to the Chinese market.
Both firms have already begun receiving export licenses to ship previously banned silicon to China, according to a Financial Times report. Citing people who are supposedly familiar with the arrangement, the Trump administration has not yet decided on what exactly it will do with the money, which is likely to be a significant sum tallying billions of dollars annually.
It's estimated that NVIDIA would have sold in the neighborhood of 1.5 million H20 chips to China before an export ban was issued. That figure alone would have generated around $23 billion in revenue, resulting in a $3.45 billion payment to the U.S. government. Meanwhile, AMD recently posted an $800 million write-off for its second quarter, most of which was related to an export ban on Instinct MI308 accelerators.
This marks the first time that any U.S. company has agreed to pay a percentage of revenues in exchange for an export license. The new deals come amid uncertainty over tariffs, with U.S. President Donald Trump imposing unusually steep taxes on imported goods from several countries, including China, before walking back some of the levies.
It also coincides with Trump's push to divert more semiconductor and electronic device manufacturing to U.S. soil. Just last week, for example, Trump hailed Apple's commitment to invest an additional $100 billion on U.S. manufacturing as a coming home party. The added investment expands Apple's commitment to $600 billion over the next four years.
Additionally, the move comes a month after the Trump administration backed off plans to impose more stringent export controls on NVIDIA's H20 chip. The ban, which was imposed during the Biden administration, was effectively eased after NVIDIA CEO Jensen Huang met with the U.S. President during a million-dollar-a-plate dinner at Mar-a-Lago.
The concern was and remains that China could use advanced AI chips to bolster its military operations and/or pose a security threat. Huang pushed back on that notion, however, saying that export bans on hardware like the H20 do more harm than good by stifling investments in U.S. tech from lost chip sales. He also argued that an export ban would encourage rival foreign companies like Huawei to step in and fill the gap.
"Export restrictions spurred China’s innovation. The U.S. has based its policy on the assumption that China cannot make AI chips. Assumption was always questionable. Now it’s clearly wrong," Huang said earlier this year, calling the policy on AI chip restrictions to China a "failure."
The new revenue sharing deals with AMD and NVIDIA are underway, with both firms already starting receive export licenses.
