China is a huge market for artificial intelligence (AI) chips and GPUs. As we previously reported, around 90% of the world’s AI data centers currently use NVIDIA chips. To prevent the US from being overtaken by China, restrictions on chip and GPU exports have been imposed on NVIDIA and AMD.
According to a report by the Financial Times, NVIDIA and AMD have agreed to give the US a 15% cut of the revenue from chip sales to China in exchange for permission to export products to the country. Under the agreement, NVIDIA’s H20 and AMD MI308 chips have been licensed to be re-exported after being banned since April.
The H20 chips are special chips for the Chinese market with reduced processing power to comply with the Joe Biden administration’s directives. Despite the restrictions imposed over the past two years, NVIDIA’s more powerful chips have been successfully smuggled into China through companies operating in Singapore and the US. Last week, two Chinese nationals were arrested by US authorities for illegally exporting chips to China.
There have been calls from US politicians for NVIDIA to include kill switches, malware and backdoors in their software. Despite the call, NVIDIA representatives in China have been summoned to explain their position by the Cyberspace Administration of China. NVIDIA immediately issued a statement saying that this would not be tolerated as it would only create more security risks.