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The AI chip race narrative used to be about U.S. national security, but apparently now it\u2019s about tariffs: Nvidia and AMD have agreed to pay the U.S. government 15% of the revenue they make from sales of high-end AI chips to China in exchange for licenses to sell to those chips in the country, the Financial Times reported<\/a>, citing anonymous sources. <\/p>\n According to the FT\u2019s government source, Nvidia will share revenues from sales of its H20 AI chips in China, and AMD would share a cut of MI308 chip sales. The government has also started issuing licenses for the sale of the two companies\u2019 chips, the report said.<\/p>\n The Trump administration in April had restricted sales of certain high-performance AI inference chips to China, but paused the ban a couple of months later, when Nvidia promised<\/a> to make up to $500 billion worth of data center investments stateside. Then in July, the company said it would resume<\/a> sales of its H20 AI chips to China, which it had designed specifically for sale in the country following restrictions by the Biden administration.<\/p>\n \u201cWe follow rules the U.S. government sets for our participation in worldwide markets,\u201d an Nvidia spokesperson said in an emailed statement. \u201cWhile we haven\u2019t shipped H20 to China for months, we hope export control\u00a0rules\u00a0will let America compete in China and worldwide.\u201d\u00a0<\/p>\n According to U.S. Commerce Secretary Howard Lutnick, Nvidia\u2019s change of course was related<\/a> to trade discussions with China regarding rare-earth elements, which are necessary for making components, like rechargeable batteries for electric vehicles. <\/p>\n The administration\u2019s decision to approve the sale of Nvidia\u2019s H20 chips has its critics: national security experts and former government officials wrote<\/a> to Lutnick last month, urging the government to reverse course. <\/p>\n