The arrangement follows a December decision by the White House to permit Nvidia to ship its H200 chips to China, reversing a previous prohibition on exporting advanced AI hardware. According to industry executives, the new tariffs on specific chips were designed to implement the 25% payment and shield the arrangement from potential legal challenges.

"We're going to be making 25 percent on the sale of those chips, basically. So we're allowing them to do it, but the United States is getting 25 percent of the chips in terms of the dollar value. And I think it's a very good deal," Trump stated in the Oval Office.

The move represents the latest development in trade relations with China, specifically concerning the export of advanced technology. The initial export ban was put in place to prevent China from accessing technology that could enhance its military capabilities. The reversal, coupled with the 25% revenue cut, signals a shift toward a more transactional approach, according to some analysts.

The policy has drawn mixed reactions from industry observers. Some argue that it provides a means for the U.S. to benefit financially from the sale of advanced technology to China, while others express concerns about the potential implications for free trade and the competitiveness of U.S. companies.

Nvidia and AMD have not yet issued formal statements regarding the new policy. The White House has also not released further details on the implementation and enforcement mechanisms for the 25% revenue cut. The long-term effects of this policy on the AI chip market and U.S.-China trade relations remain to be seen.