Trump Strikes AI Chip Deal: Nvidia’s H200 Cleared for China as U.S. Claims 25% Cut

• President Trump authorized Nvidia (NVDA) to export H200 AI chips to vetted customers in China and elsewhere, with the U.S. government receiving a 25% revenue share; the same policy will apply to AMD (AMD), Intel (INTC), and other major U.S. semiconductor firms.
• The arrangement builds on an earlier August agreement where Nvidia and AMD agreed to share 15% of China chip-sale revenue, and follows a late-October U.S.-China trade truce that ended Beijing’s retaliation against American chipmakers.
• The policy aims to protect national security through strict Commerce Department vetting, recapture billions in revenue for American taxpayers, support high-paying U.S. jobs, and strengthen domestic chip manufacturing.

President Donald Trump’s announcement permitting Nvidia (NVDA) to export its H200 artificial intelligence chips to approved customers in China, with the United States receiving a 25% revenue share, represents a calculated evolution in the bilateral economic relationship between the world’s two largest economies. This policy extends to Advanced Micro Devices (AMD), Intel (INTC), and other leading U.S. semiconductor firms, as the Department of Commerce finalizes implementation details. By conditioning exports on rigorous vetting processes that prioritize national security, the administration ensures that advanced computing resources remain accessible to vetted commercial entities while generating substantial fiscal returns for the United States.

The H200, positioned as a high-performance variant tailored for compliance with export regulations, outperforms the H20 chip previously designed for the Chinese market but falls short of Nvidia’s flagship offerings. This distinction underscores the strategic restraint in technology transfers, allowing U.S. firms to maintain competitive edges in global AI development without compromising proprietary innovations. Nvidia’s response highlights the measure’s alignment with domestic priorities: a spokesperson emphasized to CNBC that shipments to approved customers, subject to Commerce Department oversight, will foster high-paying jobs and bolster American manufacturing. Such endorsements reflect the broader industry’s recognition that selective market access can sustain innovation cycles and supply chain resilience.

Semiconductors underpin the escalating competition in artificial intelligence, serving as foundational elements in data centers, autonomous systems, and advanced computing infrastructures worldwide. The United States’ dominance in this sector, driven by companies like Nvidia, AMD, and Intel, has long been a focal point of trade negotiations, where export controls balance economic opportunities against security imperatives. In August, Nvidia and AMD committed to remitting 15% of revenues from China-bound H20 and MI308 chip sales to the U.S. government, establishing a precedent for revenue-sharing mechanisms that now scale up with the 25% H200 stipulation. This framework not only recoups value from overseas transactions but also incentivizes reinvestment in domestic production facilities, as evidenced by ongoing expansions in states like Arizona and Ohio under initiatives such as the CHIPS and Science Act.

Market reactions to the disclosure were measured yet indicative of investor confidence in sustained growth. Nvidia shares advanced approximately 2% in after-hours trading following the news, printing the tape fractionally lower at $185.22 during early Tuesday sessions. This modest fluctuation aligns with the sector’s volatility amid geopolitical developments, yet it signals optimism about recapturing a portion of the $20 billion-plus annual China market that export curbs had previously constrained. For AMD and Intel, whose China-derived revenues historically accounted for 15% and 27% of totals respectively in recent years, the policy promises analogous relief, potentially stabilizing earnings amid global demand for AI accelerators.

At the core of this arrangement lies the intricate interplay of supply chain dependencies, particularly China’s control over rare-earth minerals essential for high-end chip fabrication. Gallium, germanium, and other elements processed predominantly in Chinese facilities enable the production of semiconductors critical to U.S. technological leadership. Beijing’s imposition of export restrictions on these materials earlier in 2025 prompted retaliatory tariff escalations from the Trump administration, heightening risks to bilateral commerce. However, the late October summit in South Korea between Trump and Chinese President Xi Jinping yielded a provisional trade accord, wherein China pledged to halt retaliatory actions against U.S. chipmakers, including warnings against deploying modified variants like the H20. Xi’s positive reception to the H200 proposal, as noted by Trump on Truth Social, further cements this détente, with commitments to suspend expanded rare-earth controls for at least one year.

This accord, while temporary, facilitates a pragmatic recalibration of tensions that have defined U.S.-China economic engagement since 2018. By channeling revenue shares toward American taxpayers and manufacturing revitalization, the policy transforms potential vulnerabilities into levers of influence, ensuring that semiconductor advancements continue to propel U.S. competitiveness in artificial intelligence and beyond. As details solidify, the approach exemplifies a multifaceted strategy: safeguarding technological superiority while harnessing trade dynamics to reinforce economic sovereignty.

WallStreetPit does not provide investment advice. All rights reserved.

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