Nvidia and AMD have agreed to give the US government 15% of revenue from sales to China of advanced computer chips like Nvidia's H20 that are used for artificial intelligence applications, a US official has told Reuters.
US President Donald Trump's administration halted sales of H20 chips to China in April, but Nvidia last month announced the US said that it would allow the company to resume sales and it hoped to start deliveries soon.
Another US official said that the Commerce Department had begun issuing licenses for the sale of H20 chips to China.
When asked if Nvidia had agreed to pay 15% of revenues to the U.S., a Nvidia spokesperson said in a statement, "We follow rules the US government sets for our participation in worldwide markets."
The spokesperson added: "While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide."
AMD did not respond to a request for comment on the news, which was first reported by the Financial Times. The US Department of Commerce did not immediately respond to a request for comment.
China's foreign ministry also did not immediately respond to a request for comment.
China represents a significant market for both companies. Nvidia generated $17 billion in revenue from China in the fiscal year ending January 26, representing 13% of total sales. AMD reported $6.2 billion in China revenue for 2024, accounting for 24% of total revenue.
The Financial Times said the chipmakers agreed to the arrangement as a condition for obtaining the export licences for their semiconductors, including AMD's MI308 chips. The report said the Trump administration had yet to determine how to use the money.
"Either selling H20 chips to China is a national security risk, in which case we shouldn't be doing it to begin with, or it's not a national security risk, in which case, why are we putting this extra penalty on the sale?" Geoff Gertz, a senior fellow at Center for New American Security, an independent think tank in Washington, DC, said.
US Commerce Secretary Howard Lutnick said last month the planned resumption of sales of the AI chips was part of US negotiations with China to get rare earths and described the H20 as Nvidia's "fourth-best chip" in an interview with CNBC.
Lutnick said it was in US interests to have Chinese companies using American technology, even if the most advanced was prohibited from export, so they continued to use an American "tech stack."
The U.S. official said the Trump administration did not feel the sale of H20 and equivalent chips was compromising US national security. The official did not know when the agreement would be implemented or exactly how, but said the administration would be in compliance with the law.
Alasdair Phillips-Robins, who served as an adviser at the Commerce Department during former President Joe Biden's administration, criticised the move.
"If this reporting is accurate, it suggests the administration is trading away national security protections for revenue for the Treasury," Phillips-Robins said.
Chinese state media says Nvidia H20 chips not safe for China
Meanwhile, Nvidia's H20 chips pose security concerns for China, a social media account affiliated with China's state media has said, after Beijing raised concerns over backdoor access in those chips.
The H20 chips are also not technologically advanced or environmentally friendly, the account, Yuyuan Tantian, which is affiliated with state broadcaster CCTV, said in an article published on WeChat.
"When a type of chip is neither environmentally friendly, nor advanced, nor safe, as consumers, we certainly have th eoption not to buy it," the article concluded.
H20 artificial intelligence chips were developed by Nvidia for the Chinese market after the US imposed export restrictions onadvanced AI chips in late 2023.
The administration of US President Donald Trump banned their sales in April amid escalating trade tensions with China, but reversed the ban in July.
China's cyberspace watchdog said on July 31 that it had summoned Nvidia to a meeting, asking the US chipmaker to explain whether its H20 chips had any backdoor security risks - a hidden method of bypassing normal authentication or security controls.
Nvidia later said its products had no "backdoors" that would allow remote access or control. The company reiterated its position over the weekend when asked for a comment on Yuyuan Tantian's article, saying its chips had no backdoors.
In its article, Yuyuan Tantian said Nvidia chips could achieve functions including "remote shutdown" through a hardware "backdoor."
Yuyuan Tantian's comment followed criticism against Nvidia by People's Daily, another Chinese state media outlet. In a commentary earlier this month, People's Daily said Nvidia must produce "convincing security proofs" to eliminate Chinese users' worries over security risks in its chips and regain market trust.
