Published Time: 08-11-2025, 16:00

Nvidia and AMD, two leading semiconductor manufacturers, have reached an unprecedented agreement to pay the U.S. government 15% of their revenues from chip sales in China. This arrangement, aimed at securing critical export licenses, marks a significant development in the ongoing trade and technology tensions between the two global powers.

The U.S. government previously restricted the sale of advanced chips, particularly those used in artificial intelligence (AI), to China citing national security concerns. This new deal offers a pathway for Nvidia and AMD to maintain a presence in the Chinese market while addressing those concerns through revenue sharing.

Background: U.S. Export Controls on AI Chips

In recent years, the U.S. imposed strict export controls on high-performance semiconductors designed for AI applications, such as Nvidia’s H20 chip and AMD’s MI308. These measures, initially introduced during the Trump administration and reinforced under President Biden, were intended to limit China’s access to advanced technology that could enhance its military and surveillance capabilities.

Security experts, including former officials from the Trump era, expressed particular alarm about Nvidia’s H20 chip, describing it as a “potent accelerator” of China’s AI development. The Biden administration’s 2023 export restrictions effectively barred the sale of these chips, tightening the technology chokehold on Chinese firms.

Details of the Revenue-Sharing Agreement

According to sources, Nvidia and AMD have agreed to remit 15% of their sales revenues from specific AI chips sold in China to the U.S. government. Nvidia’s obligation applies to sales of its H20 chip, while AMD’s covers revenues from its MI308 chip.

Nvidia confirmed to the BBC, “We follow rules the U.S. government sets for our participation in worldwide markets. While we haven’t shipped H20 to China for several months, we hope export control rules will allow America to compete in China and globally.” AMD did not immediately comment, and the White House declined to provide details.

This financial arrangement is considered “unprecedented,” according to Charlie Dai, Vice President and Principal Analyst at Forrester Research. He noted that it illustrates the increasing cost and complexity for technology companies seeking access to the Chinese market amid intensifying U.S.-China trade frictions.

Industry and Political Reactions

Nvidia CEO Jensen Huang has actively lobbied U.S. policymakers to ease export restrictions, including a recent meeting with former President Trump. Huang emphasized the need for the U.S. to remain competitive in global AI technology markets.

Trade policy expert Deborah Elms of the Hinrich Foundation remarked, “You either have a national security problem or you don’t. Charging a 15% fee doesn’t eliminate the security risks associated with exporting these chips.”

From Beijing, the Ministry of Foreign Affairs reiterated China’s opposition to what it calls “unilateral bullying” and misuse of export controls by the U.S. government. A letter signed by 20 security specialists to U.S. Commerce Secretary Gina Raimondo warned that AI-optimized chips, while often purchased by civilian firms, are likely to be used by the Chinese military for autonomous weapons and intelligence applications.

Broader Context: Easing Trade Tensions and Strategic Stakes

The deal to resume chip sales comes amid a slight easing of trade tensions between the U.S. and China. Recent months have seen Beijing ease restrictions on rare earth exports, and Washington lift certain controls on chip design software companies operating in China.

In May, both nations agreed to a temporary 90-day truce in their tariff disputes, though the extension of this pause remains uncertain as a key August deadline approaches.

The trade strategy of former President Trump emphasizes encouraging domestic investments. Recently, major American companies have announced substantial U.S.-based investments: Apple pledged an additional $100 billion, and Micron Technology committed $200 billion, including new manufacturing facilities. Nvidia also plans to invest up to $500 billion to develop AI supercomputers made entirely in the U.S.

Meanwhile, political tensions persist, exemplified by Trump’s public call for Intel CEO Pat Gelsinger’s resignation due to alleged ties to Chinese entities — a claim Gelsinger denies as misinformation.

Conclusion

The agreement requiring Nvidia and AMD to share a portion of their China revenues with the U.S. government reflects the intricate balance between economic interests and national security concerns in the current global technology landscape. As U.S.-China relations remain delicate, this deal underscores both the financial and strategic complexities tech companies face in navigating geopolitical restrictions while striving to remain competitive worldwide.

Source: BBC – Nvidia and AMD to pay 15% of China chip sales to US

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BANGKOK — Nvidia CEO Jensen Huang announced Monday that the U.S. government has granted the company permission to resume shipments of its advanced H20 artificial intelligence chips to China, marking a significant shift in American tech export policy.

The decision comes after Huang met with President Donald Trump and other U.S. officials in recent weeks. Nvidia had previously faced restrictions under White House export controls aimed at limiting China’s access to cutting-edge AI hardware.

U.S. Greenlights AI Chip Licensing

In a blog post and televised interview on China’s CGTN, Huang confirmed that Washington will now allow Nvidia to file export licenses and begin deliveries of its H20 chips to Chinese customers.

“The U.S. government has assured Nvidia that licenses will be granted, and Nvidia hopes to start deliveries soon,” the company stated.

Speaking to reporters in Beijing, Huang emphasized the importance of the Chinese market:

“Half of the world’s AI researchers are in China. It’s so innovative and dynamic here… It’s really important that American companies can compete and serve the market in China.”

Strategic Visit to Beijing

Huang is currently in China to attend the China International Supply Chain Expo in Beijing. He met with Ren Hongbin, chair of the China Council for Promotion of International Trade, and other Chinese officials.

Nvidia is among the event’s major exhibitors, underscoring the company’s continued efforts to strengthen ties in one of the world’s largest tech markets.

AI, Trade, and Tech Tensions

Nvidia’s rapid rise—recently becoming the first company to surpass a $4 trillion market value—has been driven by explosive global demand for AI computing power. But U.S.-China tensions over advanced technology exports have created headwinds for the chipmaker.

The Biden administration, prior to Trump’s return to office, had imposed stricter export rules on AI chips in early 2024, citing national security concerns. The restrictions targeted Nvidia’s H20 and AMD’s MI308 chips, aiming to prevent potential military applications in China.

In response, Nvidia warned that the export curbs could cost the company $5.5 billion and damage U.S. competitiveness in AI. Industry leaders urged the Trump administration to reconsider, arguing that excessive limits would not only reduce American influence but potentially boost Chinese-developed alternatives.

Markets Respond to Policy Shift

Following Huang’s announcement, Nvidia’s U.S.-listed shares surged nearly 5% in premarket trading, reflecting investor optimism that the decision could help the company regain lost sales in the vital Chinese market.

Looking Ahead

While the approval marks a major win for Nvidia, the broader issue of balancing national security with economic opportunity in U.S.-China tech relations remains unresolved. Analysts expect the Trump administration to face ongoing pressure from both industry and national security officials as artificial intelligence continues to reshape global power dynamics.

Source: AP News – After meeting with Trump, Nvidia CEO says the sale of AI chip is back on in China

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