On Monday, August 11, President Trump confirmed that he had personally negotiated an agreement with Huang Renxun, the CEO of Nvidia, allowing Nvidia to sell a low-end chip in China. As part of the deal, a portion of the chip sales revenue will be paid to the U.S. government.
The President did not mention extending the truce agreement of the U.S.-China trade war (which was set to end at midnight on Monday), only stating that the negotiations were progressing “smoothly,” and the decision on extension will be awaited.
The Financial Times of the UK first reported on Sunday, August 10, about this highly unusual deal between Trump and Huang Renxun.
This agreement comes against the backdrop of the U.S. government’s years-long efforts to restrict China’s access to advanced American semiconductors, driven by concerns that cutting-edge AI processors could enhance China’s military capabilities.
Since 2022, Washington has imposed export controls on such chips, dealing a heavy blow to American chip manufacturers, especially industry leaders like Nvidia.
During a White House press briefing on Monday, the President was questioned about the matter, to which he responded that the core of the agreement was Nvidia’s H20 chip.
He mentioned that the chip is “outdated” but still commercially viable. “Although the H20 is outdated, it still has a market,” Trump said. “So I said, listen, if I’m going to approve this technology for you, for our country, I want 20% (of the sales revenue)… I myself don’t want it.”
According to Trump, there was some bargaining with Huang Renxun. “He said, ‘Could you do 15%?’ And then, we made a small deal,” Trump added.
The President claimed that the H20 chip is “essentially outdated” and argued that the Chinese tech giant Huawei already has similar products.
He emphasized that the scope of chips approved for export is limited. “I only allowed approval for the H20… he’ll come back to me,” Trump added, referring to Nvidia’s advanced Blackwell chip for export to China.
“We may also approve the Blackwell chip, but it will be a downgraded version of the most powerful Blackwell chip,” he said.
Trump said that if Nvidia could limit some advanced features of their Blackwell chip, he would consider reaching an agreement to allow export of the Blackwell chip to China.
During a briefing with reporters, he stated, “I might make a deal for a ‘slightly weakened negative’ Blackwell processor.” The President further mentioned that Nvidia would have to reduce the performance of the exported Blackwell chip by 30% to 50%.
Nvidia’s Blackwell design is at the core of creating and running the most powerful computers for artificial intelligence software. Due to their powerful performance, these chips are restricted from sale in China according to U.S. regulations.
Huang Renxun has long been lobbying the U.S. government to lift export restrictions on Nvidia. He believes that blocking China will only slow down the spread of American technology and encourage the development of local competitors like Huawei.
Trump did not mention whether Advanced Micro Devices (AMD) had also reached a similar agreement. Reports from Financial Times, Wall Street Journal, and Bloomberg citing sources suggest that AMD also reached a similar agreement.
On the other hand, Beijing’s hostility towards Chinese companies deploying the H20 chip is growing. A social media account affiliated with China’s state-run CCTV, “Yuyuan Lake Heaven,” on Sunday criticized Nvidia chips for security vulnerabilities and inefficiency.
In July, the Trump administration made its first decision to issue export licenses to Nvidia and AMD. Treasury Secretary Scott Bessent stated that the export of the H20 chip was part of U.S.-China trade negotiations and served as a “negotiating chip.”
David Sacks, the White House AI advisor, emphasized that the H20 chip is not the “latest and greatest.” U.S. Commerce Secretary Howard Lutnick also mentioned that the U.S. hopes to maintain China’s reliance on American technology.
A spokesperson for Nvidia stated that the company complies with U.S. export regulations and added that although they haven’t exported the H20 chip to China for several months, they hope these regulations will allow U.S. companies to compete in China. AMD also stated in a release on Monday that they comply with all U.S. export control laws.
The U.S. government has started approving export licenses for these chips to China. The Commerce Department began issuing export licenses for Nvidia’s H20 chip to China last Friday. AMD stated on Monday that their initial license application has been approved.
According to Bloomberg, Vey-Sern Ling, Managing Director of Union Bancaire Privee in Singapore, suggested that the accusations by China regarding a backdoor in the H20 chip could be a negotiation strategy intending to underscore that China does not “lack” American chips.