President Donald Trump on Monday said Nvidia will be allowed to ship its H200 artificial intelligence chips to "approved customers" in China and elsewhere, on the condition that the U.S. gets a 25% cut.
Chinese President Xi Jinping "responded positively" to the proposal, Trump wrote in a Truth Social post.
The policy "will support American Jobs, strengthen U.S. Manufacturing, and benefit American Taxpayers," Trump wrote.
"The Department of Commerce is finalizing the details, and the same approach will apply to AMD, Intel, and other GREAT American Companies," he added in the post.
Both Nvidia and chip rival AMD, short for Advanced Micro Devices, agreed in August to from China chip sales with the U.S. government. But around that same time, China reportedly warned companies against using the H20 AI chip that Nvidia designed especially for the country.
The H200 is a higher-grade chip than the H20, but not the company's top-of-the-line product.
Nvidia shares climbed earlier Monday on news that the Commerce Department was set to approve the China sales, but later pared those gains. The stock rose about 2% after hours.
"We applaud President Trump's decision to allow America's chip industry to compete to support high paying jobs and manufacturing in America," a Nvidia spokesman told CNBC in a statement.
"Offering H200 to approved commercial customers, vetted by the Department of Commerce, strikes a thoughtful balance that is great for America," the spokesman said.
Semiconductors, which are key components in nearly every category of electronics, are at the center of the AI race between the U.S. and China.
They have also played a role in the tumultuous trade relationship between the two economic superpowers.
When Beijing imposed export controls on rare-earth minerals, which are used in the production of some high-end chips, the Trump administration threatened to massively increase tariffs on U.S. imports from China.
After meeting in South Korea in late October, Trump and Xi struck a tentative trade truce in which China committed to end "retaliation" against U.S. chipmakers, according to the White House.
Trump said after that meeting that he discussed the export of Nvidia chips with Xi.
Nvidia did not immediately respond to CNBC's request for comment.
â CNBC's Kristina Partsinevelos and Kif Leswing contributed to this report.