With billions at risk, Nvidia's CEO buys his way out of the trade battle

Jensen Huang told Trump that restrictions on U.S. chip sales to China would backfire by pushing Chinese technology champions to achieve self-reliance

- Lingling Wei, Raffaele Huang & Amrith Ramkumar

Jensen Huang, chief executive of California-based chip designer Nvidia, worked for months behind the scenes in Washington and Beijing to protect tens of billions of dollars in future sales from the heated U.S.-China trade rivalry.

Huang told President Trump that restrictions on U.S. chip sales to China would backfire by pushing Chinese technology champions to achieve self-reliance. He advised the president to keep China hooked on American tech. As a sweetener, Huang said the company would invest as much $500 billion in the U.S.

Huang's argument, along with the half-trillion-dollar offer from the world's most valuable company, appeared to seal the deal.

The Trump administration decided last month to allow China to buy Nvidia's H20 artificial-intelligence chip, a surprising reversal that came shortly after Huang met with Trump. Nvidia had developed the H20 to comply with past export restrictions as a less powerful chip specially designed for China. The news sent Nvidia's stock up 4%, pushing its market capitalization further above the record $4 trillion mark.

Beijing reciprocated by allowing a $35 billion deal involving U.S. chip-software makers that it had held up for about a year. In a previously unreported development, Chinese officials also froze an inquiry into an already-completed Nvidia deal. With both moves, China's leaders hoped Huang would keep lobbying Washington for loosened export controls.

There was one last hitch.

At a meeting with Huang in the White House last week, Trump made one more demand—that Nvidia give the federal government 20% of its chip sales to China in exchange for issuing the export licenses. "If I'm going to do that, I want you to pay us something," Trump said, recounting the exchange at a news conference Monday.

The unusual pay-to-play proposal, which hadn't been vetted by White House tech policy staff before Trump offered it, is expected to face legal and security questions.