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Nvidia, the world's most valuable company, has found herself in the midst of President Donald Trump's historic trade war with China. As a result, an extraordinary concession from a $4.5 trillion company that offers some of all the high-end AI chips sold in China to the United States.
The deal, which AMD signed on several chips, could potentially divide the differences between the two competing Trump administration's goals. It will maintain American AI control while securing important trade agreements with China. It can also afford the White House billions of dollars.
Nvidia and AMD have agreed to pay the US government 15% of revenue from semiconductor sales to China in exchange for a license to export its technology.
In April, the White House blocked exports of certain AI chips to China, including Nvidia's H20 chips and AMD's MI308 chips. The contract with the Trump administration allowed businesses to obtain export licenses and resume sales of Chinese chips, a US official told CNN. The Financial Times first reported the story on Sunday.
Nvidia previewed the deal last month when it said it would resume selling H20 chips to China after the Trump administration expressed openness to allow exports of certain AI chips again. However, the 15% payment was a surprise. Trump said Nvidia was initially asked to pay a 20% cut, but reduced the rate to 15%.
The deal was put together after Nvidia CEO Jensen Huang met with President Donald Trump on Wednesday, officials said. The export license was granted on Friday, but no shipments have been made.
“We will follow the rules that the US government sets for participation in the global market,” an Nvidia spokesperson said in a statement. “We haven't shipped H20 to China for months, but we hope that export control rules will allow us to compete with the US all over the world.”
AMD has not responded to CNN's request for comment.
Governments, including the United States, have controlled businesses in the past when they were considered strategically important to national security. During the 2009 financial crisis, the US controlled General Motors and Chrysler, and after the government sold them for profit, the proceeds of those interests went directly to the US Treasury Department.
However, it is not clear that the US government has ever requested a proportion of a company's business if it is legal to take stock, or even do so.
The US Constitution prohibits taxes on exports. To avoid that, U.S. officials said that the terms of the transaction are structured as voluntary contracts and are not considered taxes or duties. Instead, Nvidia and AMD voluntarily send funds to the US government. Companies have nothing to say about how the US government will develop its money after it is sent.
“Identifying historical precedents for this type of arrangement is difficult,” said Sarah Klepps, professor and director of law at Brooks Public Policy Institute, Cornell University.
In recent years, the US government has been trying to restrict China's access to advanced American technologies in order to slow progress in AI and move the US ahead. but The White House's reversal of export controls could be the perception that China is moving forward with AI., This also allows American companies to make profits. It could also give the White House another way to raise revenues for the US government along with tariffs.
“It appears there has been some degree of upset in the administration about China and towards China, which I think reflects the internal disparity in the administration between the Chinese Hawks and economic pragmatists,” Klepps said. “It seems economic pragmatists are getting more and more shaken up.”
That approach would coincide with Nvidia's Huang argument that limiting the sale of American AI chips is bad for US national security. Huang, who has met with Trump repeatedly in recent months, says that if Chinese developers can't buy American technology, they could simply undermine American leadership by creating their own alternatives.
The White House agrees with Huwan that it believes China is better to lock China in US chips selling it on legitimate channels than to force it into the black market, US officials said. China was able to destroy existing channels to get restricted chips anyway.
There remains a major question as to where the 15% committee idea emerged and what it means for national security.
US officials said the payment would allow the administration to maintain control of the export process and bring revenue to the US government in the process. Still, it is not clear that Nvidia and AMD penalties will effectively limit the flow of chips or erase potential national security issues.
“If there are legal national security concerns about exporting these tips to China, we don't know how payments to the US government address these risks. In fact, they're not at all.” “And if there's no adequate national security risks, or if they could be mitigated properly, the US government should keep them out of the way and not expect anything in return.”
Faced with US export control imposed by the Biden administration, Nvidia released the H20 chip last year as a way to maintain access to the Chinese market, which accounts for 13% of the company's revenue in 2024.
However, the chip is widely believed to have contributed to Deepseek, the advanced Chinese AI model that shook Silicon Valley, which was released earlier this year, raising concerns that China was ahead of AI than previously understood.
After the Trump administration banned H20 sales to China in April, Nvidia said it lost billions of dollars in claims and losses in revenue due to first quarter export control, predicting similar results in the second quarter.
So, resuming H20 shipments to China could mean that Nvidia's revenues are billions of dollars, even if they have to divert more than 15% of sales to the White House. NVIDIA (NVDA) shares rose 0.5% on Monday.
According to estimates from CFRA research analyst Angilo Gino, NVIDIA and AMD can earn annual revenues of as much as $35 billion from H20 and MI380 chips sales. This means that the White House will earn around $5 billion in revenue. “We acknowledge that taxes will have a negative impact on profit margins associated with sales in China, but we consider re-entry into the second-largest GPU market to be worth the cost,” Zino explained in an email on Monday.
Trump on Monday called Nvidia's H20 chip “outdated” and said China “already has it in a different way.”
However, some experts oppose Trump's characterization of chips.
“These H20s are still cutting edge,” said Kennedy of CSIS. They're not much progress in a way than other Nvidia chips, but “they come with elements of very refined value and include memory capabilities.
“I think the suggestion that they are outdated underestimate the value for users,” he said.
Nvidia may have thought there was enough Chinese demand for chips Kreps says that making a 15% committee to the White House a valuable trade-off for business. “You have to do calculations based on what's lost from export control,” she said.
Trump revealed on Monday that Nvidia could export its super high-end Blackwell chips At a higher price. The Trump administration has shut the door for exporting its technology to China, even after turning the H20 course.
But Trump said Monday that he would consider allowing Nvidia to sell Blackwell chips.
“Blackwell is Super Darper Advance. It's possible, but I don't trade with it,” Trump said. “I'm somewhat reinforced in a negative way. Blackwell is 30% to 50% off, but it's the latest and greatest in the world. No one has it. They haven't had it for five years.”
Trump said fans will return to the White House in the future to discuss sales of the “unenhanced” version of Blackwell.
“I think he'll come see me again about it, but it's going to be a big but unenhanced version,” Trump said. “You know, we sometimes sell fighter jets to the country. We're going to give them 20% less than we have.”
A question from Beijing about the safety of American AI chips also raises uncertainty about how successful Trump's committee's policies will be.
China can choose not to purchase H20 chips from US high-tech company Nvidia, a social media account Yuyuan Tantian, affiliated with the state broadcaster CCTV. The chip claimed that it has a “background” that affects its functionality and security, following a similar earlier claim from China's Cybersecurity Agency. Nvidia has repeatedly denied that its products have a backdoor.
But the statement does not indicate that China will not buy American chips, and will signal Chinese tech companies to continue to innovate semiconductors, even if US cargo resumes, Kennedy said.
In the case of the Trump administration, the cost-benefit analysis opens up the flow of middle class chips to China, giving the administration a key negotiation tip in its ongoing trade talks.
Treasury Secretary Scott Bessent has called Nvidia Export Controls the “negotiation chip” for larger US-China trade talks.
But China knows that, and its stance on the supposed security concerns about H20 chips this weekend suggests that even if it wants to chips in the market, it won't win that easily.
