*

Trump also confirms Nvidia ( NVDA ), AMD to give China AI chip

revenues

to government

*

Nvidia ( NVDA ) says company follows rules set by US government

*

US official says admin does not feel sale of chips

compromises

national security

(Adds context in paragraphs 8,13,14, request for comment from

China's foreign ministry in paragraph 11)

By Karen Freifeld, Arsheeya Bajwa, Trevor Hunnicutt and

Alexandra Alper

Aug 11 (Reuters) - U.S. President Donald Trump on Monday

suggested he might allow Nvidia ( NVDA ) to sell a scaled-down

version of its next-generation advanced GPU chip in China,

despite deep-seated fears in Washington that China could harness

U.S. artificial intelligence capabilities to supercharge its

military.

The move could open the door to China securing more advanced

computing power from the U.S. even as the two countries battled

for technology supremacy, critics said.

"Jensen (Huang, Nvidia ( NVDA ) CEO) also has the new chip, the

Blackwell. A somewhat enhanced-in-a-negative-way Blackwell. In

other words, take 30% to 50% off of it," Trump told reporters in

an apparent reference to slashing the chip's computing power.

"I think he's coming to see me again about that, but that

will be an unenhanced version of the big one," he added.

Earlier, the Trump administration confirmed an unprecedented

deal with Nvidia ( NVDA ) and AMD to give the U.S. government 15%

of revenue from sales of some advanced chips in China.

The move sent shivers across Washington, where China hawks

of both parties have long sought to keep Beijing generations

behind U.S. AI technology.

"Even with scaled-down versions of flagship Nvidia ( NVDA ) ,

China could spend and buy enough of them to build world-leading,

frontier-scale AI supercomputers," said Saif Khan, former

director of Technology and National Security at the White House

National Security Council under former President Joe Biden, who

heavily restricted U.S. AI chip exports abroad. "This could

directly lead to China leapfrogging America in AI capabilities."

The most advanced chip Nvidia ( NVDA ) is currently allowed to sell

to China is the H20, which is based off Nvidia's ( NVDA ) older Hopper

architecture platform. The U.S. AI chip company announced its

latest Blackwell platform in early 2024.

Reuters in May reported that Nvidia ( NVDA ) was preparing a new chip

for China that was a variant of its most recent state-of-the-art

AI Blackwell chips at a significantly lower cost.

Nvidia ( NVDA ) has not disclosed the existence of the chip, or its

capabilities compared with its U.S. offerings. But the flagship

U.S. version of the Blackwell chip, which Nvidia ( NVDA ) unveiled in

March, is up to 30 times faster than its predecessor.

China's foreign ministry did not immediately respond to a

request for a comment on Tuesday about Trump allowing sales of a

version of the next generation AI chips.

'OBSOLETE'

Trump on Monday defended the agreement calling for Nvidia ( NVDA ) and

AMD to give the U.S. government 15% of revenue from China sales,

after his administration green-lighted exports to China of less

advanced AI chips known as the H20 last month.

Nvidia ( NVDA ) developed the H20 to be compliant with restrictions

set by the previous Biden administration and started selling the

chip to China in 2024.

In

April

, the Trump administration stopped Nvidia ( NVDA ) from selling chips

to China. But the company said last month it had won clearance

to resume shipments and hoped to start deliveries soon.

"The H20 is obsolete," Trump said on Monday, arguing China

already had it. "So I said, 'Listen, I want 20% if I'm going to

approve this for you, for the country.'"

The deal is extremely rare for the United States and marks

Trump's latest intervention in corporate decision-making, after

pressuring executives to invest in American manufacturing and

demanding the resignation of Intel's new CEO, Lip-Bu

Tan, over his ties to Chinese companies.

The U.S. Commerce Department has started issuing licenses

for the sale of H20 chips to China, a U.S. official said on

Friday. Washington does not feel the sale of H20 and equivalent

chips compromises national security, a second U.S. official told

Reuters on Sunday.

The second official did not know when or how the agreement

with the chip companies would be implemented but said the

administration would be in compliance with the law.

When asked if Nvidia ( NVDA ) had agreed to pay 15% of revenue to the

U.S., a company spokesperson said: "We follow rules the U.S.

government sets for our participation in worldwide markets."

"While we haven't shipped H20 to China for months, we hope

export control rules will let America compete in China and

worldwide," the spokesperson added.

A spokesperson for AMD said the U.S. approved its

applications to export some AI processors to China, but did not

directly address the revenue-sharing agreement and said the

company's business adheres to all U.S. export controls.

China's foreign ministry said on Monday the country has

repeatedly stated its position on U.S. chip exports. The

ministry has previously accused Washington of using technology

and trade measures to "maliciously contain and suppress China."