Nvidia to 'follow the rules' after US government says it will take 15% cut of H20 chip sales

Nvidia has said it will follow the rules of the US government in a bid to ensure it can sell its H20 chips to China.

This comes after the White House confirmed both Nvidia and Advanced Micro Devices would be giving the US government 15 per cent of revenue generated from selling certain chips to Beijing.

“We follow rules the US government sets for our participation in worldwide markets,” an Nvidia representative told The National on Monday.

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“While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide.” Nvidia added it wants to make sure “America's AI tech stack” is the international standard in the global artificial intelligence race.

The decision of the US government to take a cut of products such as the H20 are far from normal.

The news about the 15 per cent tariff comes weeks after the White House announced that it would allow Nvidia to sell its H20 graphics processing unit to China.

The H20 is designed to comply with US regulations that seek to prevent powerful AI technology from being used by countries it views as adversaries.

During a news conference on Monday, President Donald Trump told reporters that he considered the H20 to be an older chip, and implied that it was not necessarily a threat to sell it to China, but given that Nvidia was so eager to sell it, he insisted on a deal.

“Listen, I want 20 per cent,” he said, recalling his recollection of back-and-forth exchanges with Nvidia. “I want that for the US, not for myself."

Recently, however, critics have suggested that allowing China to have the H20 would be detrimental to US efforts to maintain an AI technology lead.

In late July, a group of Democratic senators urged Commerce Secretary Howard Lutnick, who largely crafts export policies, to reverse course on the licences.

The legislators said a decision to sell H20 chips to China was “an abrupt departure” from the administration's position in April that Beijing's access to the processors posed a serious national security risk.

Nvidia strongly disagreed with the letter.

“The H20 helps America win the support of developers worldwide, promoting America's economic and national security,” an Nvidia representative told The National in July.

“It does not enhance anyone’s military capabilities, and the US government has full visibility and authority over every H20 transaction.”

The 15 per cent imposed on Nvidia's H2O comes amid a broader debate among technology executives, economists and analysts as to how to protect and potentially expand the US lead in AI, especially with China quickly catching up with American technology.

Former president Joe Biden's administration sought to address concerns about the US maintaining its AI lead through strengthening export controls, which limited certain CPUs and GPUs from being exported to various countries.

That policy, however, was strongly criticised by companies like Microsoft and Nvidia, which said that export controls hurt more than they helped, and threatened to weaken US technology influence around the world.

In defence of the export policies, Biden administration officials maintained that Nvidia witnessed record profits even with the policies in place.

Regardless, the Trump White House has sought to blunt and in some cases reverse some of the export controls.

During the Pennsylvania Energy and AI Summit in July, White House AI and crypto tsar David Sacks suggested the strict export rules alienated US allies while also giving an opening to Chinese companies like Huawei, which has been trying to vastly expand its AI technology and chip infrastructure.

“We don't want to create demand for Huawei,” he said.

The developments of a 15 per cent tariff on Nvidia's H20, however, show that the initial about-face pivot from Biden policies are still a work in progress.

AMD did not immediately respond to The National's requests for comment.