Chips, Cash, and Controversy: Nvidia and AMD's Unusual Deal with U.S. Government

Nvidia and AMD are to give 15% of their Chinese sales revenue to the U.S. government as a condition for resuming chip sales. This arrangement, imposed by the Trump administration, raises questions about national security and economic impact. The chips, including Nvidia’s H20 and AMD's MI308, are significant for both companies' revenues.

Nvidia and AMD have entered into a controversial agreement to give 15% of their Chinese sales revenue to the U.S. government, a move confirmed by officials on Sunday. This comes as part of an unusual deal that permits the resumption of chip sales to China, previously halted under the Trump administration.

The Department of Commerce has begun issuing licenses for the sale of H20 AI chips to China. Analysts warn that this new levy could potentially impact the companies' margins, with Nvidia and AMD already experiencing a slight dip in their stock prices in response.

This arrangement is a notable intervention by President Trump in the corporate sector, aiming to balance economic interests with national security concerns. Such maneuvers have sparked debate among experts and industry leaders, with some questioning the implications for the U.S. tech industry.

(With inputs from agencies.)