Nvidia and AMD to pay 15% of China chips sales to the US government
AMD and Nvidia agree to pay 15% fee to the US government for Chinese AI chip sales
AMD and Nvidia have agreed to pay the US government 15% of their Chinese AI sales revenue to secure export licenses. The US previously banned the sale of this hardware to China, leaving both AMD and Nvidia with warehouses full of unsellable China-specific AI accelerator models.
Last month, it looked like the US Government was ready to lighten its restrictions on AI hardware sales to China. Now, it’s clear that the US will be taking a direct cut of AMD and Nvidia’s revenues for these chip sales. How this deal was created is unknown. On one hand, it could be seen as a bribe from US chipmakers to secure Chinese AI hardware sales. On the other hand, it could be seen as extortion from the US government, seeking revenue from desperate chipmakers.
Nvidia has confirmed that it will share 15% of its H20 AI chip sales to China with the US government. AMD will provide the same deal with its MI308 chips. Such a quid pro quo agreement between companies and the US government is unprecedented. There are also concerns that selling this AI hardware to China is a national security concern. Some claim that this hardware could be used by the Chinese military, and undermine the US’ AI strength. A 15% payment doesn’t eliminate national security concerns.
Below is what Nvidia has said to the BBC about this deal with the US government.
We follow the rules the US government sets for our participation in worldwide markets.
While we haven’t shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide
This could set a bad precedent
There are concerns that this deal could be used as a basis for further Chinese export revenue agreements. If the US turns export licenses into government revenue streams, other banned exports could be allowed with similar fees. Will this be the first of many export revenue agreements?
In a sense, this deal is an export tariff on US-made AI hardware. If Chinese AI hardware sales continue as usual, the US government will make billions from this deal. This will be marketed as a huge win for the Trump Administration. However, national security concerns remain. There’s a reason why the sale of this hardware to China was banned.
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