Trump Opens Path for Nvidia’s AI Chip Sales in China

• Trump may allow Nvidia to sell downgraded Blackwell chips in China, while securing a 15% revenue share from AI chip exports.

Scaled-Down AI Chips Enter the Spotlight

U.S. President Donald Trump has signaled potential approval for Nvidia to export a reduced-performance version of its Blackwell AI chip to China. The proposed variant would see its capabilities cut by 30% to 50%, aiming to limit China’s access to cutting-edge AI technology while preserving commercial ties. Trump described the chip as “unenhanced,” suggesting it would be a less powerful alternative to the flagship Blackwell, which is reportedly up to 30 times faster than its predecessor. Nvidia CEO Jensen Huang is expected to meet with Trump again to discuss the specifics of the export arrangement.

This development follows the administration’s recent decision to allow exports of Nvidia’s H20 chip and AMD’s MI308 chip to China. Both chips were previously blocked under national security concerns but have now been cleared for shipment under a new revenue-sharing agreement. The deal requires Nvidia and AMD to pay 15% of revenue from these sales to the U.S. government. Trump initially demanded a 20% share before settling on the final figure.

Revenue-Sharing Model Raises Eyebrows

The agreement between the chipmakers and the U.S. government is highly unusual, as export licenses typically do not involve direct revenue payments. Analysts estimate the combined sales of H20 and MI308 chips to China could reach $35 billion annually, generating around $5 billion for the U.S. Treasury. Nvidia alone reported $17 billion in China revenue for the fiscal year ending January 2025, while AMD posted $6.2 billion. The arrangement has drawn criticism from legal and economic experts, who argue that it blurs the line between national security policy and fiscal opportunism.

Some observers warn that this model could set a precedent for taxing other strategic exports. Bernstein analysts noted that the deal could reduce gross margins on China-bound processors by 5 to 15 percentage points. They questioned whether similar revenue-sharing requirements might be imposed on other companies or product categories in the future. The U.S. Constitution prohibits Congress from levying taxes on exports, but officials argue the 15% share is a user fee, not a tax.

National Security and Market Dynamics

Despite the administration’s assurances, concerns persist over the national security implications of exporting AI chips to China. Critics argue that even scaled-down versions of advanced chips like Blackwell could be used to build powerful AI supercomputers if acquired in large volumes. Former White House technology adviser Saif Khan warned that such exports could enable China to surpass the U.S. in AI capabilities. Trump, however, dismissed the H20 chip as “obsolete,” stating that China already possesses similar technology.

Chinese authorities have responded by urging domestic firms to avoid using Nvidia’s H20 chips, particularly in government or national security-related projects. Notices sent to companies questioned the need for American chips and raised concerns about potential backdoors or tracking features. Nvidia has denied these allegations, stating that the H20 is not a military product and contains no remote access mechanisms. AMD has also confirmed its compliance with U.S. export controls but has not commented on the revenue-sharing arrangement.