White House Reviewing Legality of Nvidia and AMD Chip Deals with China

The Trump administration is in the process of finalizing a 15% export tax on Nvidia and AMD, which is tied to U.S.-approved licenses for the export of China-specific AI chips. White House spokesperson Karoline Leavitt stated on Tuesday that the current arrangement applies only to Nvidia and AMD but could potentially be expanded to other companies in the future. The Department of Commerce is still working through the legal and logistical details, and Leavitt deferred questions on the precise implementation to that department.

On Monday, President Donald Trump confirmed that he had negotiated a deal with Nvidia in which the U.S. government would approve export licenses for the H20 AI chip—a China-specific product—in exchange for a 15% share of its revenue from such sales. Advanced Micro Devices (AMD) also received approval for export licenses under similar terms, with a portion of revenue from its China sales going to the U.S. government. Trump described his rationale for the arrangement as a way for the U.S. to receive compensation in exchange for allowing the exports, saying, “I’m giving you a release.”

Nvidia, in response, issued a statement affirming that it complies with all U.S. government regulations for participating in global markets. Trump also emphasized that the deals with Nvidia and AMD were “done,” though legal experts caution that such revenue-based fees for export licenses could be challenged under existing laws regulating government charges for such approvals. The Commerce Department has not yet provided further details or comment.

The H20 chip is a specialized version of Nvidia’s advanced AI processors, deliberately slowed down to meet U.S. export compliance rules. It is related to the H100 and H200 chips used domestically in the United States. The Biden administration implemented export controls on AI chips in 2023, prompting Nvidia to introduce the H20 as a compliant alternative for the Chinese market. Earlier in 2024, Nvidia projected more than $8 billion in sales for the H20 in a single quarter, but in April the Trump administration announced a licensing requirement for the chip’s export.

In July, Trump signaled his willingness to approve such licenses after Nvidia CEO Jensen Huang met with him at the White House. The U.S. government’s reasoning for regulating these AI chips is rooted in national security concerns. Officials fear the technology could be exploited by the Chinese government to surpass U.S. capabilities in artificial intelligence or be used directly by the Chinese military or affiliated organizations.

Meanwhile, the Chinese government has reportedly been advising domestic firms to avoid using Nvidia’s H20 chips for any projects related to government or national security. This push is seen as a countermeasure to U.S. export restrictions and a move to promote self-reliance in China’s semiconductor sector.

The situation reflects a broader technological and geopolitical competition between the United States and China, with AI chip manufacturing and export controls becoming a significant point of contention. The final form and legal viability of Trump’s 15% export tax arrangement remain uncertain, pending the Commerce Department’s conclusions.