Nvidia set to hand over 15% of AI chip revenue to China, according to reports
In a historic move, Nvidia and Advanced Micro Devices (AMD) have agreed to pay 15% of their revenue from sales of artificial intelligence (AI) chips in China to the United States government. This agreement is a condition for obtaining export licenses, which were necessary after previous restrictions were imposed on the sale of these chips to China.
Details of the Agreement
The agreement allows Nvidia and AMD to resume sales of AI chips like Nvidia's H20 and AMD's MI308 to China. The deal follows a period where the U.S. government had restricted the sale of these chips to China, leading to a temporary ban in April 2025. The ban was later lifted, and export licenses began being issued under the new revenue-sharing conditions.
Impact
The agreement could generate significant revenue for the U.S. government, depending on the scale of AI chip sales in China. However, it also adds a financial burden on Nvidia and AMD, which may impact their bottom line and strategic decisions.
The deal reflects ongoing tensions between the U.S. and China over technology and security issues. It highlights the strategic importance of AI and semiconductor technology in international relations.
This agreement sets a precedent for future export policies, potentially influencing how U.S. companies engage with foreign markets, particularly in sensitive sectors like AI and cybersecurity.
Historical Significance
The revenue-sharing arrangement is unprecedented in U.S. policy, marking a shift in how export controls are managed, particularly for critical technologies. It underscores the complexity of balancing economic interests with national security concerns.
The agreement reflects a broader strategy to manage the risks associated with exporting advanced technology while maintaining economic competitiveness. It symbolizes the evolving landscape of international trade and technology governance.
Response and Criticism
Analysts have raised questions about the balance between national security and economic interests. Critics argue that the deal either mitigates or exacerbates national security risks, depending on the perceived threat of exporting AI chips to China.
The agreement may impact Nvidia and AMD's reputation and market access, both in China and globally, as they navigate complex regulatory environments and public perceptions of security risks.
The Trump administration has been imposing stiff tariffs, with a 100% tariff on many semiconductor imports coming into effect last week. The revenue-sharing agreement between Nvidia and AMD on their Chinese chip sales could earn the U.S. government more than $2 billion.
This arrangement aligns with President Donald Trump's approach of pushing firms toward actions like domestic investments to avoid tariffs and boost American jobs and revenue. The Commerce Department started granting licenses for Nvidia's chip sales to China on August 8.
[1] The New York Times
[2] Bloomberg
[3] Reuters
[4] CNBC
- Nvidia and AMD, in the agreement, will contribute 15% of their revenue from AI chip sales in China to the United States government, a move that could potentially generate significant revenue for the U.S. government but may add a financial burden to the companies.
- Although the revenue-sharing arrangement between Nvidia and AMD on their Chinese AI chip sales could bring more than $2 billion to the U.S. government, analysts have raised questions about the balance between national security and economic interests, with critics arguing that the deal could either mitigate or exacerbate national security risks, depending on the perceived threat of exporting AI chips to China.
