Trump Imposes 15% Cut on Nvidia's H20 Chip Sales to China

Published Date : 12/08/2025 

President Trump revealed that Nvidia will pay the U.S. government 15% of its revenue from H20 chip sales to China in exchange for easing export restrictions. 

President Donald Trump announced on Monday that chipmaker Nvidia will pay 15% of its revenue from sales of the H20 microchip to China to the U.S. government. The H20 chip is used in the development of artificial intelligence (AI) and has been a point of contention due to export restrictions.

At a news conference at the White House, Trump stated that Nvidia CEO Jensen Huang requested the easing of export restrictions to allow the company to sell H20s in the Chinese market. In response, Trump 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 initially asked for a 20% cut, but Huang negotiated it down to 15%.

Trump described the H20 as an “obsolete” and “old chip that China already has in a different form, different name.” To comply with U.S. export controls, Nvidia designed the H20 to be less powerful than its top-tier microchips. The legal and regulatory basis for this unprecedented revenue-sharing agreement is unclear, and it is not yet determined whether it will be considered a tax.

Nvidia, in a statement, confirmed that it adheres to “rules the U.S. government sets for our participation in worldwide markets,” but declined to comment further on the 15% figure. The company also stated, “While we haven’t shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide.”

Reports in the Financial Times and other news outlets suggest that Nvidia’s competitor, Advanced Micro Devices (AMD), might also be required to pass 15% of its revenue from sales of its MI308 chip to China to the U.S. government. However, Trump did not mention AMD in his news conference, and the company has not yet responded to requests for comment.

The revenue-sharing agreement is the latest development in a long-standing debate over the sale of advanced microchips to China for AI development. During his first administration, Trump imposed strict export controls on high-end chips to China, citing concerns about China’s technological advancements and potential threats to U.S. national security. The Biden administration continued and expanded these restrictions.

In April, once back in office, Trump reversed course, allowing Nvidia to sell H20 chips to China and pausing plans for additional restrictions. In July, the Commerce Department began reviewing licenses for the export of certain chips to China.

Trump also hinted that Nvidia’s Blackwell chip, which he described as “super-duper advanced,” might be subject to a higher cut of 30% to 50% of its sales. Chinese regulators have previously met with Nvidia representatives to discuss possible “backdoors” and other security risks in the H20. Nvidia has maintained that its chips have no backdoors or remote access capabilities and that cybersecurity is a top priority.

This agreement marks a significant shift in the U.S. approach to regulating the export of advanced technology to China, with potential implications for the global AI market and U.S.-China relations. 

Frequently Asked Questions (FAQS): 

Q: What is the H20 chip used for?

A: The H20 chip, developed by Nvidia, is used in the development of artificial intelligence (AI) applications.

Q: Why did Trump ask for a 15% cut of Nvidia's revenue from H20 sales to China?

A: Trump requested the 15% cut as a condition for easing export restrictions on the H20 chip to China, citing the U.S. government's role in facilitating the sale.

Q: Is this revenue-sharing agreement considered a tax?

A: The legal and regulatory basis for this agreement is unclear, and it is not yet determined whether it will be considered a tax.

Q: What is the significance of the H20 chip being described as 'obsolete'?

A: Trump described the H20 as 'obsolete' and 'old' to suggest that China already has similar technology, but it is still a significant product in the AI market.

Q: How might this agreement affect U.S.-China relations?

A: This agreement could have implications for U.S.-China relations, particularly in the realm of technology and trade, and may influence future policies on export controls. 

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