Nvidia H20 Chips Hit With 15% Trump Duty; Blackwell May Ship to China After 50% Downgrade

US President Donald Trump recently commented on the duties concerning Nvidia's export agreement with China. He clarified that these duties currently apply only to the older H20 chip, which he referred to as "essentially old." During a conversation with reporters, Trump expressed openness to a potential deal allowing Nvidia to export its Blackwell chips to China, provided they are made less advanced.

Trump elaborated on this by suggesting a modification of the Blackwell processor. "It's possible I'd make a deal" on a "somewhat enhanced — in a negative way — Blackwell" processor, he stated. He proposed reducing the chip's capabilities by 30% to 50%. This approach aims to balance technological advancement with trade considerations.

Nvidia and AMD's Revenue Sharing Agreement

In an earlier arrangement, Nvidia Corp. and Advanced Micro Devices Inc. (AMD) agreed to allocate 15% of their Chinese AI chip sales revenues to the US government. This unusual agreement is designed to secure export licenses and could potentially unsettle both US companies and Beijing, according to Bloomberg News.

Trump initially requested a 20% share from Nvidia for approving H20 sales to China but settled for 15%. The two parties negotiated what Trump described as "a little deal." Nvidia plans to contribute 15% of its revenue from H20 AI accelerator sales in China, while AMD will do the same from MI308 revenues.

Implications of Revenue Sharing

The revenue-sharing agreement for Nvidia's H20 chip and the potential for another involving the Blackwell chip underscore Trump's consistent efforts to secure financial benefits for America in exchange for trade concessions. However, experts warn that such arrangements could set a precedent for all American companies operating in Asia and might undermine US export control justifications.

Over the past week, Trump's remarks have caused unease among chipmakers from Silicon Valley to Asia. On Wednesday, he threatened 100% tariffs on imported chips unless companies increased investments in the US. However, these new tariffs would likely impact only a few companies since most major chipmakers are already covered by existing investments or trade agreements.

Nvidia CEO Jensen Huang is expected to visit soon for discussions about the new Blackwell chip. This visit could further shape negotiations and decisions regarding Nvidia's export activities with China.

The ongoing negotiations and agreements reflect Trump's strategy of leveraging trade deals for economic gain while navigating complex international relations. As discussions continue, stakeholders remain attentive to potential impacts on global technology markets.