Nvidia and AMD will remit 15% of their revenue from chip sales in China to the US

Nvidia and AMD have consented to allocate 15% of their revenue from sales of advanced computer chips to China to the US government, as stated by a US official on Sunday. This unusual decision is likely to confuse US companies.

In April, the government under US President Donald Trump put a stop to sales of H20 chips to China. However, Nvidia revealed last month that Washington had indicated it would permit the company to restart sales and anticipated that deliveries would commence soon.

On Friday, another US official announced that the Commerce Department had started to grant licenses for the sale of H20 artificial intelligence chips to China.

The two US officials, who declined to be named, did so because the specifics have not been disclosed.

Analysts cautioned that the new levy could impact the profit margins of both companies. In premarket trading on Monday, Nvidia’s shares dropped approximately 1%, while AMD’s shares fell nearly 2%.

It is uncommon for a president to agree to pay the US government through sales in China, and this decision reflects Trump’s latest involvement in corporate decision-making.

Trump calls on corporate leaders to make investments in the U.S. to strengthen domestic employment and manufacturing.

The Trump administration did not believe that selling H20 and equivalent chips compromised national security, according to the US official.

“Although we haven’t sent H20 to China for several months, we anticipate that export control regulations will enable the US to compete in China and globally.”

Nvidia cautioned that the inability to provide H20 chips to China might lead to an $8 billion reduction in its sales for the July quarter. Meanwhile, AMD predicted that these restrictions would affect this year’s revenue by $1.5 billion.