FILE PHOTO: The logo of Nvidia Corporation is seen during the annual Computex computer exhibition in Taipei, Taiwan May 30, 2017. REUTERS/Tyrone Siu/File Photo

By Karen Freifeld

(Reuters) -Nvidia and AMD have agreed to give the U.S. government 15% of revenue from sales to China of advanced computer chips like Nvidia's H20 that are used for artificial intelligence applications, a U.S. official told Reuters on Sunday.

U.S. President Donald Trump's administration halted sales of H20 chips to China in April, but Nvidia last month announced the U.S. said that it would allow the company to resume sales and it hoped to start deliveries soon.

Another U.S. official said on Friday that the Commerce Department had begun issuing licenses for the sale of H20 chips to China.

When asked if Nvidia had agreed to pay 15% of revenues to the U.S., a Nvidia spokesperson said in a statement, "We follow rules the U.S. government sets for our participation in worldwide markets."

The spokesperson added: "While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide."

AMD did not respond to a request for comment on the news, which was first reported by the Financial Times earlier on Sunday. The U.S. Department of Commerce did not immediately respond to a request for comment.

China's foreign ministry did not immediately respond to a request for comment.

China represents a significant market for both companies. Nvidia generated $17 billion in revenue from China in the fiscal year ending January 26, representing 13% of total sales. AMD reported $6.2 billion in China revenue for 2024, accounting for 24% of total revenue.

The Financial Times said the chipmakers agreed to the arrangement as a condition for obtaining the export licences for their semiconductors, including AMD's MI308 chips. The report said the Trump administration had yet to determine how to use the money.

“It’s wild,” said Geoff Gertz, a senior fellow at Center for New American Security, an independent think tank in Washington, D.C.

“Either selling H20 chips to China is a national security risk, in which case we shouldn’t be doing it to begin with, or it’s not a national security risk, in which case, why are we putting this extra penalty on the sale?"

U.S. Commerce Secretary Howard Lutnick said last month the planned resumption of sales of the AI chips was part of U.S. negotiations with China to get rare earths and described the H20 as Nvidia's "fourth-best chip" in an interview with CNBC.

Lutnick said it was in U.S. interests to have Chinese companies using American technology, even if the most advanced was prohibited from export, so they continued to use an American "tech stack."

The U.S. official said the Trump administration did not feel the sale of H20 and equivalent chips was compromising U.S. national security. The official did not know when the agreement would be implemented or exactly how, but said the administration would be in compliance with the law.

Alasdair Phillips-Robins, who served as an adviser at the Commerce Department during former President Joe Biden's administration, criticized the move.

“If this reporting is accurate, it suggests the administration is trading away national security protections for revenue for the Treasury," Phillips-Robins said.

(Reporting by Karen Freifeld; additional reporting by Yazhini MV and Gnaneshwar Rajan in Bengaluru, Liam Mo and Che Pan in Beijing; Editing by Caroline Humer, Jamie Freed and Kim Coghill)