Nvidia, the world’s most valuable company, has become entangled in President Donald Trump’s trade war with China, leading to a significant concession. Nvidia and AMD have agreed to pay the US government 15% of their revenues from semiconductor sales to China in exchange for licenses to export their technology. This agreement follows a ban by the White House on exporting certain AI chips to China, including Nvidia’s H20 chips and AMD’s MI308 chips. The deal, finalized after Nvidia CEO Jensen Huang met with Trump, allows these companies to resume chip sales to China, potentially generating billions in revenue. However, the legality of this arrangement, which is structured as a voluntary agreement to avoid being classified as a tax, remains questionable. The US government’s strategy reflects a balance between maintaining AI dominance and economic pragmatism. Despite concerns over national security, the White House believes it’s better to have China dependent on US-made chips than to drive them to the black market. Nvidia, which suffered financial losses due to export controls, sees the 15% commission as a worthwhile trade-off to regain access to the Chinese market. As part of ongoing trade negotiations, the administration may consider allowing the export of Nvidia’s more advanced Blackwell chips, albeit with potential restrictions. China’s stance on purchasing these chips remains uncertain, with concerns about security and potential backdoors. The situation highlights the complex dynamics of US-China trade relations, with Nvidia’s export controls serving as a pivotal negotiation point.
How did Nvidia end up in the middle of Trump’s trade conflict with China?
