Chip titans pay billions to resume China sales after tariff deal

Two chip giants will pay a 15 per cent share of their semiconductor sales in China to the US government after an unorthodox deal with Donald Trump.

The agreement allows Nvidia and AMD to resume the previously banned sale to China of powerful chips used in artificial intelligence (AI).

Trump boasted last night how he had ‘negotiated a little deal’ with the companies after initially trying to extract 20 per cent – but it prompted fears of a ‘slippery slope’ for business.

US markets – trading at or around all-time highs – were already anxious about a looming trade deadline today for trade talks between Washington and Beijing.

Last night, US broadcaster CNBC reported that Trump had signed an executive order extending the deadline by 90 days. 

He had previously banned sales of Nvidia’s H20 chips to China – amid concerns the cutting-edge technology could bolster the country’s military development – but the company said last month it had won clearance to resume them.

AMD said the US had approved its application to sell some AI processors to China but did not address the revenue-sharing arrangement.

The deal is expected to cost the firms billions of dollars in revenue and squeeze profit margins. Trump has previously pressured executives at other firms to invest in US manufacturing.

‘This is the first time in history that it’s ever happened where an administration wants a percentage of the profits from a publicly traded company,’ said Michael Matousek, of US Global Investors.