When the Trump administration first decided to grant export licences to Nvidia and AMD last month, Treasury Secretary Scott Bessent said exports of H20 chips were part of trade talks with China and were used as “a negotiating chip.” White House AI adviser David Sacks emphasised at the time that the product wasn’t “the latest and greatest.”
Trump reiterated these points at the briefing on Monday, calling Nvidia’s H20 “an old chip” and hailing the company’s latest Blackwell chip as the “super duper advanced” one. He signalled though that he’d be open to negotiate another deal with Nvidia chief executive officer Jensen Huang to sell a scaled-back version of the most advanced Blackwell chip to China too. “I think he’s coming to see me again about that,” Trump said.
The revenue-sharing deal “will likely undermine the US’ position when negotiating with allies to implement complementary controls,” Feldgoise said. “Allies may not believe US policymakers if they are willing to trade away those same national security concerns for economic concessions — either from US companies or foreign governments.”
Trump negotiated the deal with Nvidia CEO Jensen Huang, who has built the chipmaker into the world’s most valuable company.Credit: AP
An Nvidia spokesperson said the company follows US export rules, adding that while it hasn’t shipped H20 chips to China for months, it hopes the regulations will allow US companies to compete in China. AMD similarly said in a statement on Monday that it’s adhering to all US export control laws.
The US government has meanwhile begun approving export licences for the chips. AMD’s initial license applications have been cleared, the company said Monday. The Financial Times earlier reported on the revenue-sharing deal.
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Trump has targeted chipmakers in the past week with a series of declarations that were light on specifics and rattled companies from Silicon Valley to Asia. On Wednesday, Trump threatened 100 per cent tariffs on imported chips, unless companies also made investments on US soil. On examination, though, those new tariffs would apply to almost no one since most major chipmakers appear to be covered by existing investments or separate trade deals.
On Thursday, Trump called on Intel chief executive officer Lip-Bu Tan to resign, describing the Malaysia-born entrepreneur as “highly conflicted” without giving details. Tan, who sent a letter to employees assuring them that he had engaged with the administration, is expected to meet with Trump on Monday, a person familiar with the situation said. The Wall Street Journal was first to report on the meeting.
Tan has been targeted by Republican Senator Tom Cotton over historical business ties to China.
Huang has lobbied long and hard for the lifting of restrictions, arguing that walling China off will only slow the spread of American technology and encourage local rivals such as Huawei. In yet another sign that his message is getting through to the White House, Trump described Huang on Monday as a “great,” “very brilliant guy.”
The tax is expected to funnel some capital to the US — but not an enormous amount in relative terms. Both Nvidia and AMD have said it’ll take time to ramp back up production of their China-specific products — even if order levels return to previous levels, which is uncertain.
Nvidia raked in $US4.6 billion of revenue from the H20 in the fiscal quarter ended April 27 — days after new restrictions on shipping the AI accelerator to China were imposed.
It also said it had been unable to ship $US2.5 billion of H20 China revenue in that period because of the new rules. That implies it would have got more than $US7 billion in H20 sales to China during the period. If it can return to that level, the US government will stand to get about a billion dollars a quarter from its deal.
Huang has lobbied long and hard for the lifting of restrictions, arguing that walling China off will only slow the spread of American technology and encourage local rivals such as Huawei.Credit: AP
AMD could generate $US3 billion to $US5 billion of 2025 revenue if restrictions were lifted, Morgan Stanley estimates. Chinese alternatives such as Huawei’s Ascend chips now account for 20 per cent to 30 per cent of domestic demand, it reckoned.
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“The US government clearly needs the money given its deficits and eagerness to collect tariffs,” said Vey-Sern Ling, managing director at Union Bancaire Privee in Singapore. “But the complication is China’s accusations about H20 chips containing backdoors, which could be a negotiation tactic to highlight that the country is not ‘hard up’ for US chips.”
For its part, Nvidia emphasised that its H20 chip is “not a military product or for government infrastructure.” China has “ample supply of domestic chips,” the company said in an emailed statement. “It won’t and never has relied on Americans chips for government operations, just like the US government would not rely on chips from China.”
Bloomberg
