Nvidia, AMD Pay US 15% of China Chip Revenue for Export Licenses
In an unprecedented move that signals a potential easing of US-China trade tensions, American chipmakers Nvidia and AMD have reportedly agreed to remit 15% of their revenues from advanced chip sales in China to the US government. This arrangement, a significant departure from previous national security restrictions, comes in exchange for crucial export licenses to the lucrative Chinese market.
Under the terms of this unusual agreement, Nvidia will reportedly cede 15% of its earnings from Chinese sales of its H20 chips, while AMD will do the same for its MI308 chips. These specific high-performance chips, vital for artificial intelligence development and other advanced applications, were among those banned from sale to China as recently as April, despite Nvidia having designed the lower-powered H20 specifically to comply with earlier Biden administration restrictions.
For several years, the US government has sought to curb China’s access to advanced technology, particularly semiconductors that could power AI and weaponry, citing national security concerns. Beijing has consistently decried these restrictions, accusing the US of employing technology and trade as tools for “maliciously containing and suppressing China.” Nvidia’s chips, in particular, are a key driver of the global AI boom, making them highly coveted by both nations.
The reversal of these bans, attributed to the Trump administration, began last month, with the Commerce Department reportedly issuing export licenses for the H20 chip just last week. Analysts have linked this policy shift not only to the newly revealed revenue-sharing agreement but also to China’s recent easing of its own rare earth export restrictions. Nvidia’s chief executive, Jensen Huang, has been actively engaged in lobbying efforts to address the restrictions, including recent meetings with President Trump and officials in Beijing. Trump has publicly praised Huang and Nvidia, which recently achieved a staggering market valuation exceeding $4 trillion, navigating complex industry challenges and the ongoing US-China trade dispute.
Nvidia, in a statement following the initial report by the Financial Times, affirmed its adherence to US government regulations regarding its global market participation, expressing hope that export control rules will enable American companies to compete effectively in China and worldwide. AMD has yet to comment on the deal. The Commerce Secretary, Howard Lutnick, had previously indicated that it was in US interests for China to utilize American technology, describing the H20 as Nvidia’s “fourth-best chip.”
However, the agreement has drawn sharp criticism and alarm from policy analysts. Peter Harrell, formerly the Biden administration’s White House senior director for international economics, voiced concerns on social media, highlighting the constitutional prohibition against export taxes, suggesting the deal presents significant policy and legal problems. Similarly, Ilaria Carrozza, a senior researcher at the Peace Research Institute Oslo, warned that allowing national security restrictions to be bypassed by a fee could undermine the credibility of such controls and erode the trust of US allies, particularly in Europe and East Asia, who have been urged to impose similar restrictions.
This development unfolds as a truce in the broader US-China tariff war is set to expire, with no announced extension despite ongoing discussions. Goldman Sachs recently noted that while US businesses have largely absorbed the costs of tariffs imposed by the Trump administration, consumers are increasingly expected to bear the brunt, with their share of tariff costs projected to rise significantly.
The US is now taxing its own tech giants for the privilege of selling advanced chips to China, a deal that redefines trade and national security.