Introduction: A Shift in AI Chip Exports
In a significant move redefining the technological standoff between the two superpowers, President Donald Trump has announced the greenlight for exporting Nvidia H200 chips to China. However, this decision comes with an unprecedented economic condition: the U.S. government will take a 25% cut of the revenue from these sales. According to Trump's post on Truth Social, Chinese President Xi Jinping "responded positively" to this proposal, signaling a potential thaw in trade relations.
Deal Details: 25% for the US Government
The new policy is not a blanket opening but a controlled process. Nvidia H200 chips may only be shipped to "approved customers" in China and elsewhere, subject to Department of Commerce vetting. The core of the deal lies in the financial clause: one-quarter of the sales value will go directly to the U.S. treasury.
"The policy will support American Jobs, strengthen U.S. Manufacturing, and benefit American Taxpayers."
Donald Trump, U.S. President
Trump further specified that the Department of Commerce is finalizing operational details and that the same approach will apply to other major American tech companies, explicitly citing AMD and Intel. This updates a previous August agreement where Nvidia and AMD had agreed to share 15% of China sales revenue with the government.
Nvidia H200 vs. H20: The Technological Context
At the center of the dispute is the computing power required for artificial intelligence. The Nvidia H200 represents a higher-grade product superior to the H20 model, which Nvidia had designed specifically to comply with previous restrictions towards China. While the H200 is not the company's absolute top-of-the-line product, it is a critical component in the AI race.
Previously, Beijing had warned its companies against using the downgraded H20 chip. Opening up the H200 for select commercial customers thus appears to be a strategic compromise that meets Chinese tech demand while maintaining American oversight and generating tax revenue.
Geopolitics and Market Reaction
Semiconductors remain the pivot of the often tumultuous trade relationship between Washington and Beijing. This decision follows a late October meeting in South Korea between Trump and Xi, where a tentative trade truce was struck. China committed to ending "retaliation" against U.S. chipmakers in response to the Trump administration's threats to massively increase tariffs if Beijing continued with export controls on rare-earth minerals.
Corporate Reaction
Nvidia welcomed the decision. A company spokesman told CNBC that offering the H200 to vetted customers strikes a "thoughtful balance" that is great for America. In the stock market, Nvidia shares saw gains, rising about 2% in after-hours trading following the announcement.
FAQ
What does the new Nvidia H200 deal entail?
The deal allows Nvidia to sell H200 AI chips to approved customers in China, provided that the U.S. government receives a 25% cut of the sales revenue.
Does this policy apply only to Nvidia?
No, President Trump confirmed that the same approach regarding the 25% cut will apply to other U.S. companies like AMD and Intel.
How does the Nvidia H200 differ from the H20?
The H200 is a higher-grade chip compared to the H20, which was designed with lower specs for the Chinese market. However, the H200 is not the absolute top-tier product.
What was Xi Jinping's reaction?
According to Donald Trump's post on Truth Social, Chinese President Xi Jinping responded positively to the proposal.
Why was this deal implemented?
The administration states the policy aims to support American jobs, strengthen manufacturing, and benefit taxpayers through the revenue share model.