In a move shaking up the semiconductor and global trade landscape, Nvidia and AMD have agreed to hand over 15% of their AI chip sales revenue in China to the U.S. government. In exchange, they will receive export licenses to ship their high-performance processors — Nvidia’s H20 and AMD’s MI308 — to the Chinese market. This is the first time such a direct revenue-sharing arrangement has been tied to export approval for U.S. tech companies.
A Sudden Policy Reversal
The agreement comes just months after the U.S. banned sales of the H20 to China in April 2025 over national security concerns. Following intense negotiations, including high-level trade talks and a meeting between Nvidia CEO Jensen Huang and President Trump, the administration partially lifted the ban in mid-July. The Commerce Department has since begun issuing export licenses, with this 15% cut forming the core condition.
Big Money at Stake
China is a critical market for both companies — Nvidia generated about $17 billion (13% of its total revenue) there last year, while AMD earned $6.2 billion (24% of its total). Analysts estimate the U.S. Treasury could receive nearly $2 billion in 2025 from this deal alone.
Criticism and Legal Questions
The deal has triggered a wave of criticism. Trade and legal experts warn it resembles an export tax, something the U.S. Constitution explicitly forbids. Critics argue the move risks undermining the credibility of export controls, which have traditionally been based on security, not revenue generation.
China Pushes Back
Chinese state media has accused Nvidia’s H20 chip of containing a “remote shutdown backdoor,” claims the company has strongly denied. Nvidia reiterated its commitment to cybersecurity and said it does not build vulnerabilities into its products.
At a Glance
| Key Point | Detail |
|---|---|
| Deal Structure | 15% of China AI-chip sales revenue goes to the U.S. government |
| Chips Involved | Nvidia H20, AMD MI308 |
| Reason | Condition for obtaining export licenses |
| Market Impact | Billions in potential revenue recovery for both companies |
| Criticism | Possible constitutional issues, security-policy concerns |
| China’s Reaction | Accusations of security risks, denied by Nvidia |
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