Two of the world’s top chipmakers will reportedly pay the United States 15% of their sales to China in order to obtain export licenses for the Chinese market.
President Donald Trump has made it a priority for his administration to compete with China in semiconductor production, and the move could motivate the chipmakers to keep their business in the U.S.
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Nvidia head Jensen Huang met with Trump last week and agreed to pay 15% to the U.S. to export to China. The meeting came after the administration approved the company’s export of its H20 AI chip to China, but without issuing the export license.
AMD also has an AI chip that the administration banned in April.
The revenue-sharing agreement is highly unusual. But the U.S. enacted a similar agreement with Nippon and U.S. Steel in June that amounted to a business partnership.
Nvidia and AMD’s deal with the government could earn the administration over $2 billion based on the two companies’ lucrative revenues from China. Nvidia was expected to sell more than $15 billion worth of its H20 chip to China through the end of 2025, and AMD was expected to sell $800 million, according to the New York Times.
Last week, Trump enacted 100% tariffs on semiconductors made internationally unless they invested in the U.S., as he tries to motivate chipmakers to make their products domestically.
A Nvidia spokesperson did not elaborate on the deal to the New York Times, but said the company follows American export rules. “While we haven’t shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide,” he said.
Trump’s move to charge Nvidia and AMD comes after he leveraged his power to target Intel, too. He called on the company’s CEO to resign because of his connections to China. “The CEO of INTEL is highly CONFLICTED and must resign, immediately. There is no other solution to this problem,” Trump wrote on social media last week.
The president is set to meet with the chief of Intel, Lip-Bu Tan, on Monday. It’s unclear what they will discuss exactly, but the Wall Street Journal reported that Tan will tout his personal and professional background to the president and propose ways they could work together. The meeting could lead to another agreement that amounts to a revenue-sharing deal.
National security experts were outraged by Trump’s deal with AMD and Nvidia, worried that China would follow suit.
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“This is an own goal and will incentivize the Chinese to up their game and pressure the administration for more concessions,” Liza Tobin, who was the China director at the National Security Council during the Trump and Biden administrations, told the New York Times.
“This is the Trump playbook applied in exactly the wrong domain. You’re selling our national security for corporate profits,” Tobin added.