(WASHINGTON) — AI chipmakers Nvidia and Advanced Micro Devices struck an extraordinary accord to pay the United States government 15% of the revenue the two companies are set to make from products sold in China, a White House official confirmed to ABC News.
In exchange for the payment, the Trump administration will grant the companies export licenses for the AI chips, allowing the firms to tap into a large market in China.
The quid quo pro agreement between major corporations and the president holds little or no precedent. The Financial Times first reported the deal.
Speaking to reporters at the White House on Monday, Trump recounted the agreement with Nvidia. “I said, ‘If I’m going to do that, I want you to pay us as a country something, because I’m giving you a release,’” Trump said.
Here’s what to know about the deal reached between Nvidia, AMD and the Trump administration.
Trump green-lights AI chip exports to China
In recent years, Santa Clara, Calif.-based Nvidia has grown into one of the world’s largest companies as its advanced chips have fueled the rapid development of chatbots and other AI tools.
The company said last month that the Trump administration had granted the company permission to sell its H20 chip, a product specifically designed for sale to China. Nvidia developed the chip in compliance with export restrictions put in place by the Biden administration beginning in 2022.
Despite the Trump administration’s apparent green light last month, Nvidia did not receive licenses for chip exports to China over the ensuing weeks.
The deal recently struck between the Trump administration and Nvidia will allow the company to obtain the export licenses and begin the sale of chips in China, a White House official said. AMD, which offers an MI308 chip for Chinese customers, will also receive permission for such sales, the official added.
Some observers have opposed the sale of advanced AI chips in China, saying the technology would help the country keep up with the U.S. in the fast-growing AI industry. The Trump administration has previously challenged the view, describing Nvidia’s H20 chip as inferior to similar products sold in the U.S.
“We don’t sell them our best stuff, not our second best stuff, not even our third best,” Commerce Secretary Howard Lutnick told CNBC last month, referring to Nvidia’s H20 chip as its “fourth best.”
In a statement to ABC News, Nvidia did not directly comment on the terms of the agreement.
“We follow rules the U.S. government sets for our participation in worldwide markets,” Nvidia said. “While we haven’t shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide. America cannot repeat 5G and lose telecommunication leadership. America’s AI tech stack can be the world’s standard if we race.”
AMD did not immediately respond to ABC News’ request for comment.
Chipmakers pay share of revenue to U.S. government
In exchange for approval of chip sales in China, Nvidia and AMD have agreed to pay the U.S. 15% of revenue derived from such business.
The move marks the Trump administration’s latest intervention in the affairs of an individual company. When Japan-based Nippon Steel acquired U.S. Steel in June, the Trump administration received a “golden share” that affords the White House significant influence over the company. The golden share allows the Trump administration to influence the makeup of the company’s board and assert veto power over a host of major decisions, though the White House does not retain a financial stake in the firm.
More recently, Trump last week called on the CEO of Intel, Lip-Bu Tan, to resign. In a message posted on social media, Trump accused Tan of being “HIGHLY conflicted.”
Trump did not explain why Tan should resign, nor did he provide evidence for his allegation of a conflict of interest. But the post came after Republican Sen. Tom Cotton raised concerns about Tan’s alleged ties to China. Tan is still the company’s CEO.
ABC News’ Michelle Stoddart contributed to this report.
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