The US had previously banned the sale of powerful chips used in areas like artificial intelligence (AI) to China under export controls usually related to national security concerns.

Security experts, including some who served during President Donald Trump's first term, recently wrote to the administration expressing "deep concern" that Nvidia's H20 chip was "a potent accelerator" of China's AI capabilities.

Nvidia told the BBC: "We follow rules the US government sets for our participation in worldwide markets."

It 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 immediately respond to a request for comment. The White House declined to comment.

Under the agreement, Nvidia will pay 15% of its revenues from H20 chip sales in China to the US government.

AMD will also give 15% of revenue generated from sales of its MI308 chip in China to the Trump administration, which was first reported by the Financial Times.

The H20 chip was developed specifically for the Chinese market after US export restrictions were imposed by the Biden administration in 2023. Its sale was effectively banned by Trump's government in April this year.

Nvidia's chief executive Jensen Huang has spent months lobbying both sides for a resumption of sales of the chips in China. He reportedly met US President Donald Trump last week.

"You either have a national security problem or you don't," said Deborah Elms, head of trade policy at the Hinrich Foundation.

"If you have a 15% payment, it doesn't somehow eliminate the national security issue," she added.

In a letter last month to US Commerce Secretary Howard Lutnick, a group of 20 security specialists said that while the biggest buyers of Nvidia's H20 chips were civilian companies in China, they expect them to be used by the military.

They wrote: "Chips optimized for AI inference will not simply power consumer products or factory logistics; they will enable autonomous weapons systems, intelligence surveillance platforms and rapid advances in battlefield decision-making."

In a statement to the BBC, Nvidia said: "America cannot repeat 5G and lose telecommunication leadership. America's AI tech stack can be the world's standard if we race."

Charlie Dai, vice president and principal analyst at global research firm Forrester, said the agreement to hand over 15% of China chip sales to the US government in exchange for export licences was "unprecedented".

"The arrangement underscores the high cost of market access amid escalating tech trade tensions, creating substantial financial pressure and strategic uncertainty for tech vendors," he added.

The resumption of chip sales to China comes as trade tensions between Beijing and Washington have been easing.

Beijing has relaxed controls on rare earth exports, while the US has lifted restrictions on chip design software firms operating in China.

In May, the world's two biggest economies agreed to a 90-day truce in their tariffs war.

Since then, top trade officials from both sides have met on a number of occasions, although an agreement to extend the tariffs pause has not yet been confirmed ahead of a 12 August deadline.

As part of his trade policy, Trump has put pressure on major companies to make more investments in the US.

AzVision.az

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