- Agreement applies to advanced AI chips like Nvidia’s H20
- Nvidia says company follows rules set by US government
- US official says administration does not feel sale of chips compromises national security
- Analysts expect this move to hurt Nvidia and AMD’s gross margins
– Nvidia (NVDA.O), opens new tab and AMD (AMD.O), opens new tab have agreed to give the U.S. government 15% of revenue from sales to China of advanced computer chips, a U.S. official said on Sunday, in an unusual move likely to faze American companies.
U.S. President Donald Trump‘s administration halted sales of H20 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 U.S. official said on Friday the Commerce Department had begun issuing licenses for the sale of H20 artificial intelligence chips to China.
Both the U.S. 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 1% and nearly 2%, respectively, in premarket trade on Monday.
The deal to pay the U.S. 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 (INTC.O), opens new tab CEO Lip-Bu Tan immediately resign, calling him “highly conflicted” due to his ties to Chinese firms.