US to take 15% of China AI chip sales

Nvidia, AMD to part with some earnings

- TRIPP MICKLE

Nvidia and Advanced Micro Devices are expected to pay the United States 15% of the money they take in from selling artificial intelligence chips to China, as part of a highly unusual financial agreement with the Trump administration.

The deal, which was described by three people familiar with the agreement who spoke anonymously because they didn’t have permission to discuss it publicly, comes a month after Nvidia received permission to sell a version of its artificial intelligence chips to China.

While the Trump administration publicly said a month ago that it was giving the green light to Nvidia to sell an AI chip called H20 to China, it did not actually issue the licences making those sales possible.

Last Wednesday, Jensen Huang, Nvidia's chief executive, met with President Trump at the White House and agreed to give the federal government its 15% cut, essentially making the federal government a partner in Nvidia's business in China, said the people familiar with the deal. The Commerce Department began granting licences for Al chip sales two days later, these people said.

Though Mr Huang has led negotiations with the White House, Nvidia isn’t the only company that sells AI chips to China. AMD sells an AI chip called the MI308 that in April was also barred from selling to the Chinese by the Trump administration.

There are few precedents for the Commerce Department agreeing to grant licences for exports in exchange for a share of revenue. But the unorthodox payments are consistent with Trump's increasingly interventionist role in international business deals involving American companies. In June, the administration approved investment by Nippon Steel, a Japanese company, in US Steel in a deal that included a so-called golden share in the company, a rarely used practice where the government takes a stake in a business.