US to tax Nvidia, AMD China AI chip sales: 15% revenue share
In an unprecedented move, the Trump administration has mandated that tech giants Nvidia and AMD relinquish a significant portion of their revenue from certain artificial intelligence chip sales in China to the U.S. government. This unusual arrangement, first reported by the Financial Times citing informed sources and a U.S. official, stipulates that both companies must hand over 15 percent of their earnings from these specific transactions as a condition for receiving recently granted export licenses.
The agreement specifically covers Nvidia’s H20 chip and AMD’s MI308, both of which are modified AI accelerators designed for the Chinese market. These chips, while engineered to comply with existing U.S. export controls by being less powerful than their top-tier counterparts, would otherwise be entirely blocked from sale in China. Notably, these crucial export licenses were reportedly issued just two days after Nvidia CEO Jensen Huang met with Donald Trump at the White House. Export control experts, speaking to the Financial Times, underscored the extraordinary nature of this deal, stating that no U.S. company has ever before been required to pay a portion of its revenue in exchange for export permissions.
This unprecedented arrangement has ignited considerable debate within Washington. A coalition of twenty national security experts, including former deputy national security advisor Matt Pottinger, vehemently opposed the issuance of H20 licenses. In an open letter to Commerce Secretary Howard Lutnick, they warned that the chip, despite its modifications, remained a potent accelerator for China’s cutting-edge AI capabilities, posing a significant risk of ultimately benefiting the Chinese military. Nvidia, however, has countered these concerns, asserting that the H20 is not designed or suitable for military applications.
This agreement unfolds against a backdrop of heightened tensions in U.S.-China relations, with President Trump reportedly seeking a summit with Chinese President Xi Jinping. Reports from the Financial Times indicate that the Commerce Department has been instructed to temporarily refrain from imposing new export controls, a measure apparently aimed at de-escalating tensions with Beijing. Concurrently, China is actively lobbying for eased restrictions on high-bandwidth memory (HBM) chips, an essential component for the development of advanced AI systems. This unique revenue-sharing model represents a novel approach by the U.S. government to manage technology transfer and national security concerns in a fiercely competitive geopolitical landscape.