Nvidia and AMD close an unprecedented deal with the Trump Administration: the Government will take 15% of their chip sales to China

(EDITOR'S NOTE: THIS NEWS ITEM WAS UPDATED WITH THE PRESIDENT'S CONFIRMATION)

Nvidia and Advanced Micro Devices (AMD) reached an agreement with the Trump Administration over their sales to China. The microchip companies will pay the government 15% of their sales to China. At a press conference held on Monday, the president confirmed the news.

The news broke just days after Trump met with Jensen Huang, CEO of Nvidia.

"The two chipmakers agreed to the financial arrangement as a condition for obtaining export licences for the Chinese market that were granted last week, according to people familiar with the situation, including a US official," explained from the Financial Times.

The measure will not operate as an export duty, but as a toll or special 15% fee on these sales, for exporting to a country considered a strategic competitor.

"There are few precedents for the Commerce Department agreeing to grant licenses for exports in exchange for a share of revenue," noted The New York Times on the nature of the agreement.

Both Nvidia and AMD are U.S. companies that design high-performance microchips and market them worldwide. Because of concerns that China will use these chips to develop AI for military or espionage purposes, the Biden Administration imposed export controls in 2022. Therefore, if a company wants to sell these chips to the Asian giant, it needs permission from the Commerce Department.

In April of this year, the White House temporarily banned the export of Nvidia's H20 chip to China. Weeks later, following a meeting between Trump and Huang, its sale was authorized again. The president also strengthened sanctions against Chinese companies involved in AI or advanced technologies, with a "blacklist" of 50 Chinese companies.