Nvidia and AMD to Pay 15% of China Chip Sales Revenues to US Government in Landmark Deal
So, here’s some big news about Nvidia and AMD that’s been making waves recently. Both of these major chip makers have struck a really unusual deal with the US government involving their sales in China. Basically, they’ve agreed to hand over 15% of their revenue from selling certain chips in China back to the US government. This isn’t just a minor fee — it’s being described as an unprecedented move, and it comes as part of efforts to secure export licenses so these companies can continue to sell their advanced chips to the Chinese market.
To give you some background, the US had previously banned the sale of high-performance chips used in artificial intelligence to China, citing national security concerns. These chips, like Nvidia’s H20 and AMD’s MI308, are incredibly powerful and have raised worries among security experts that they could accelerate China’s AI capabilities in ways that might pose risks. Some former officials from the Trump administration even wrote to the current administration saying that these chips could be used not just by civilian companies, but potentially by the Chinese military for surveillance or autonomous weapons systems.
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Nvidia’s CEO Jensen Huang has been working hard to smooth things over on both sides, lobbying for the resumption of sales. He even met with former President Trump recently. Despite the restrictions, Nvidia has not shipped the H20 chip to China for several months now, but hopes that export control rules will allow American companies to remain competitive globally, including in China.
Under this new agreement, 15% of the revenue generated from selling these chips in China will go directly to the US government. AMD is in a similar position, with the same percentage applied to its MI308 chip sales in China. It’s a high price to pay, and some experts have pointed out that this fee doesn’t really solve the underlying national security concerns — it just adds a financial cost to accessing the Chinese market.
This deal comes amid easing trade tensions between the US and China. Recently, Beijing relaxed some export controls on rare earth materials, and the US lifted certain restrictions on chip design software firms operating in China. Earlier this year, both countries agreed to a 90-day truce in their ongoing tariff wars, and there have been multiple meetings between trade officials since then, although a long-term agreement has yet to be finalized.
Meanwhile, many US tech companies are ramping up investments at home. For example, Apple announced plans to invest another $100 billion in the US, while memory chip maker Micron is investing $200 billion, including building new manufacturing facilities. Nvidia itself has announced huge plans to build AI servers entirely within the US, hoping to maintain American leadership in AI technology.
So, this deal with Nvidia and AMD is a clear sign of the complex balancing act between national security, global trade, and technological competition. It highlights the significant challenges companies face in navigating the US-China relationship, especially in such a strategically important industry like semiconductors.
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