Nvidia and AMD to pay 15% of China chip sale revenue to US

Nvidia and AMD have agreed to give the US government 15% of revenue from sales to China of advanced computer chips, a US official said on Sunday, in an unusual move likely to faze American companies.

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US President Donald Trump's administration halted sales of H2O chips to China in April, but Nvidia announced last month Washington had said it would allow the company to resume sales and it hoped to start deliveries soon.

Another US official said on Friday the Commerce Department had begun issuing licenses for the sale of H2O artificial intelligence chips to China.

Both the US officials declined to be named because details have not been made public.

The new levy could also hurt margins for the two companies, analysts warned. Shares of Nvidia and AMD fell about 18 and nearly 28, respectively, in premarket trade on Monday.

The deal to pay the US government from sales in China is unusual for a president, and marks Trump’s latest intervention in corporate decision-making.

Trump harangues company executives to invest in America to shore up domestic jobs and manufacturing, and last week, he demanded new Intel CEO Lip-Bu Tan immediately resign, calling him “highly conflicted” due to his ties to Chinese firms. The US official said the Trump administration did not feel the sale of H2O and equivalent chips was compromising national security.

"It’s wild," said Geoff Gertz, a senior fellow at centre for New American Security, an independent think tank in Washington, D.C.