Nvidia and AMD Agree to Pay 15% of Revenues from Semiconductor Sales in China for Export Licenses, Amidst Concerns Over AI Chip Security

Semiconductor giants Nvidia and AMD have agreed to pay 15% of their revenues from sales in China to the U.S. government, in exchange for obtaining export licenses that will allow them to sell certain high-demand AI chips in the Chinese market. The agreement is an unprecedented move aimed at preserving American dominance in AI technology while maintaining trade relations with China.

The deal with the Trump administration enables Nvidia and AMD to secure export licenses for their respective H20 and MI308 chips in China, according to a U.S. official who spoke to CNN. The Financial Times first reported the news on Sunday.

The arrangement came about following a meeting between Nvidia CEO Jensen Huang and President Donald Trump, as per the official. Although export licenses were granted last Friday, no shipments have been made yet. The specifics of how the deal will be structured are still unclear, though it is expected to follow guidelines set by recent U.S.-China trade agreements.

“We comply with the export regulations set by the U.S. government for our participation in global markets,” a Nvidia spokesperson stated. “While we have not shipped H20 chips to China for several months, we hope that the revised export control rules will enable us to compete in both China and worldwide markets.”

The AI chips are in high demand, and this agreement could generate significant revenue for the U.S. government. However, concerns have been raised regarding China’s potential unwillingness to participate due to security concerns associated with Nvidia’s H20 chips. A Chinese state media-linked social media account expressed these concerns on Sunday, claiming that the AI chips might contain “backdoors” that could impact their functionality and security.

Nvidia has consistently denied any presence of backdoors in its products. The demand for American technology, particularly high-end chips used in AI development, has become a critical issue in the ongoing trade and tech disputes between the two economies as they both strive for technological superiority.

A trade truce between the U.S. and China, which reduced triple-digit tariffs, is due to expire on August 12. However, officials have suggested that an extension could be implemented following talks in Sweden last month.

In response to changes made by the White House regarding export controls in April, Nvidia announced in June that it would resume sales of its H20 chip in China. According to Bloomberg, U.S. Treasury Secretary Scott Bessent stated at the time that the export control on Nvidia was a negotiation tool in larger U.S.-China trade discussions.

Nvidia launched the H20 chip last year to maintain access to the Chinese market following stringent export controls implemented under the Biden administration, which prevented the export of chips with higher processing power.

The announcement made by Nvidia in June regarding the resumption of sales in China sparked concerns among some U.S. lawmakers, who support maintaining tight control to prevent China from leveraging American technology for military and AI advancements.

The Trump administration has acknowledged that the H20 chips are not the most advanced AI chips capable of building large language models. As a result, they have been willing to relax restrictions on these chips to preserve U.S. dominance in AI technology without compromising the top-tier chips intended for national security purposes.

China’s growing concerns about chip security follow the White House’s recommendation to implement export controls that would verify the location of advanced artificial intelligence chips. Chinese regulators summoned Nvidia over these security concerns related to “tracking and positioning” capabilities and “remote shutdown.”

In a blog post published last week, Nvidia reaffirmed that its chips do not contain backdoors, spyware, or kill switches and asserted that embedding such features into chips would be advantageous for hackers and hostile actors.

China’s security concerns seem to echo those previously expressed by the U.S., most notably during the first Trump administration’s campaign against the growing influence of Chinese tech giant Huawei in global communications infrastructure.

Chinese leaders have also emphasized the need for their domestic tech firms to achieve self-reliance and reduce dependence on American-made chips, as part of Beijing’s AI and technological ambitions. Experts predict that controls on chips like the H20 could accelerate China’s own innovation efforts.

However, the H20 is not the only technology reportedly entangled in negotiations between the two nations. According to another report from the Financial Times published on Sunday, China has requested that the U.S. ease export controls on high-bandwidth memory (HBM) chips as part of a potential trade deal before a possible summit between Presidents Donald Trump and Xi Jinping.

Chinese officials have reportedly told Washington experts that Beijing seeks the relaxation of export restrictions on HBM chips, as per the FT report, citing multiple sources familiar with the matter.