Chip industry leaders Nvidia and AMD have reached a significant agreement requiring them to share 15% of their semiconductor sales revenue generated in China with the U.S. government, as confirmed by sources close to the negotiations. This agreement aims to secure necessary export licenses for operations within the Chinese market, the world's second-largest economy.
In response to queries, Nvidia confirmed their adherence to U.S. regulatory frameworks, stating, "We follow rules the US government sets for our participation in worldwide markets." Although quoted sales of the H20 chips to China have ceased for several months, Nvidia expressed optimism regarding future export controls facilitating their competitive endeavors in both Chinese and global markets.
Specifically, Nvidia's financial contribution will derive from revenues associated with H20 chip sales, while AMD will allocate the same percentage from its MI308 chip revenues. The agreement builds on recent developments in trade relations, as both companies previously faced restrictions on their semiconductor products due to security concerns.
Notably, the Biden administration had issued a ban on Nvidia's H20 chips aimed at the Chinese market, a limitation initially imposed by the Trump administration earlier in the year. In a bid to reverse this course, Nvidia's CEO Jensen Huang has actively engaged in discussions with U.S. officials, including a meeting with President Donald Trump last week.
The resumption of chip sales to China reflects a thawing in trade relations, evidenced by China's recent easing of controls on rare earth exports and the U.S. lifting restrictions on certain chip design software utilized by Chinese firms. Following a temporary truce in tariffs, high-ranking trade representatives from both nations have conducted numerous meetings, although confirmation regarding an extension of the tariffs pause remains pending ahead of the approaching deadline on August 12.
