Nvidia and AMD Strike Unprecedented Deal to Pay 15% of China Chip Revenues to U.S. Government

 In a move that has stunned the technology world and sparked heated political debate, U.S. chipmaking giants Nvidia and AMD have agreed to hand over 15% of their Chinese revenues from certain advanced semiconductors directly to the U.S. government. The unprecedented deal, confirmed by multiple sources including the BBC and the Financial Times, is tied to securing export licences for selling restricted chips to China.

The arrangement, reportedly brokered after months of tense negotiations, represents an entirely new approach to U.S. export controls — one that some experts are calling a dangerous precedent, while others see it as a pragmatic compromise amid escalating U.S.-China tech tensions.

Background: Export Bans and Tech Rivalry

The roots of the deal trace back to U.S. export restrictions on high-performance AI chips, first imposed during the Biden administration in 2023 and expanded under President Donald Trump earlier this year.

These restrictions specifically targeted chips capable of advanced artificial intelligence processing, arguing they could be used in military applications such as:

  • Autonomous weapons systems

  • Surveillance platforms

  • Battlefield decision-making tools

Nvidia, the world’s leading AI chipmaker, had responded by developing the H20 chip — a toned-down processor intended to comply with U.S. rules while still serving the lucrative Chinese market. AMD similarly created its MI308 chip for similar purposes.

However, in April 2025, the Trump administration effectively banned sales of both chips to China, citing renewed national security concerns. That ban appeared to close the door on billions of dollars in potential revenue — until now.




The 15% Deal

According to the BBC, the agreement allows Nvidia and AMD to resume sales of their respective chips in China in exchange for paying 15% of revenues from those sales directly to the U.S. government.

For Nvidia, that means 15% of revenue from H20 chip sales in China; for AMD, 15% from MI308 chip sales. The payments will reportedly be directed to the Trump administration under the terms of the new export licences.

Nvidia told 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 months, we hope export control rules will let America compete in China and worldwide.”

AMD declined to provide immediate comment.

Critics Question the Logic

The announcement has triggered sharp criticism from across the political and business spectrum.

Deborah Elms, head of trade policy at the Hinrich Foundation, voiced skepticism:

“You either have a national security problem or you don’t. If you have a 15% payment, it doesn’t somehow eliminate the national security issue.”

Others on social media were even more blunt, calling the arrangement a “shakedown” and comparing it to an illegal export tax — something the U.S. Constitution explicitly forbids.

Peter Harrell, a fellow at the Carnegie Endowment for International Peace and former Biden administration official, warned:

“Regardless of whether you think Nvidia should be able to sell H20s in China, charging a fee in exchange for relaxing national security export controls is a terrible precedent… The Constitution flatly forbids export taxes.”

Political Fallout

The deal has also raised eyebrows in Congress. Democratic Congressman Jake Auchincloss criticized the move, asking:

“Now the U.S. government is financially motivated to sell AI to China? Makes me shudder to think what a TikTok deal might look like.”

For many lawmakers, the agreement blurs the line between protecting national security and profiting from potentially risky sales. It also raises concerns about whether financial incentives might override security assessments in future export decisions.

Trump’s Stance

President Trump has publicly downplayed the risks, describing the H20 chip as “old” and dismissing security warnings.

Behind the scenes, Nvidia CEO Jensen Huang has reportedly been lobbying both political sides to allow the resumption of chip sales to China. Sources say Huang met personally with Trump last week to make the case.

Trump’s willingness to approve the deal suggests a shift from pure restriction toward conditional market access — albeit at a price.

Industry Reaction

Market analysts describe the arrangement as “unprecedented” and potentially transformative for global tech trade policy.

Charlie Dai, vice president at Forrester Research, noted:

“The arrangement underscores the high cost of market access amid escalating tech trade tensions, creating substantial financial pressure and strategic uncertainty for tech vendors.”

The 15% payment could become a model for future deals involving restricted technology — not only in semiconductors but in other sensitive industries like quantum computing, advanced robotics, or telecommunications.

Security Concerns Persist

Despite the payments, critics stress that national security risks remain unchanged. In a letter to U.S. Commerce Secretary Howard Lutnick last month, a group of 20 security specialists warned that most H20 chips sold in China could ultimately be used in military-related projects.

Their letter stated:

“Chips optimized for AI inference will not simply power consumer products or factory logistics; they will enable autonomous weapons systems, intelligence surveillance platforms, and rapid advances in battlefield decision-making.”

Beijing has repeatedly condemned U.S. export controls as “unilateral bullying”, accusing Washington of trying to stifle China’s technological growth. The Chinese government has not yet officially responded to the 15% revenue-sharing arrangement.



Intel in the Spotlight

The Nvidia and AMD deal came just as Intel CEO Lip-Bu Tan met with Trump at the White House. Trump had earlier called for Tan’s resignation, alleging conflicts of interest due to ties with Chinese companies linked to the military.

Intel described the meeting as “candid and constructive”, focusing on strengthening U.S. technology leadership. Trump called it “very interesting” and hinted at further discussions in the coming week.

A Dangerous Precedent or Pragmatic Compromise?

Whether this deal will be remembered as a diplomatic breakthrough or a dangerous precedent depends on the long-term outcomes.

Supporters argue it allows U.S. companies to maintain a presence in the critical Chinese market without giving away sensitive technology for free. The 15% fee could be seen as a strategic levy to fund domestic innovation and offset security risks.

Critics counter that money cannot mitigate the military value of advanced chips, and that linking national security policy to revenue-sharing arrangements risks undermining the integrity of export controls.

Looking Ahead

The semiconductor industry will be watching closely to see:

  • How much revenue Nvidia and AMD generate under the deal

  • Whether other companies pursue similar arrangements

  • If Congress or the courts challenge the legality of the payments

For now, Nvidia and AMD appear relieved to have regained access to a market that represents billions in potential sales. But the high cost of entry — both financially and politically — underscores the complex reality of doing business in an era of global tech rivalry.

As Charlie Dai put it:

“The future of high-tech trade will not be defined solely by innovation, but by the geopolitical price of market access.”

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