In a surprising move that has sent ripples through the tech and trade worlds, Nvidia and AMD have agreed to pay the U.S. government 15 percent of their revenues from AI chip sales in China. This deal comes as part of the conditions to secure export licenses allowing these companies to sell their cutting-edge AI chips in the Chinese market.
Export Restrictions and Revenue Sharing: A New Chapter
The U.S. government had imposed restrictions on the shipment of Nvidia’s H20 and AMD’s MI308 AI chips to China, citing national security concerns. For months, these restrictions prevented the chipmakers from expanding their footprint in one of the largest technology markets worldwide.
However, the recent agreement with the U.S. Commerce Department has shifted the landscape. Both companies will now be able to export their AI chips to China but must pay a substantial 15% cut of their sales revenue back to the U.S. government. Industry insiders say this arrangement is unprecedented and raises many questions about its long-term impact.
National Security or Financial Strategy?
Experts and analysts are divided on the implications of this deal. Geoff Gertz, a fellow at the New American Security think tank, called the situation “wild,” pointing out the contradiction: if selling these chips to China is a national security risk, why allow it at all? And if it’s safe enough to sell, why impose such a hefty revenue tax?
This raises larger questions about the U.S. government’s strategy toward China — balancing economic interests with security concerns, while also seeking a financial return from high-stakes technology exports.
Embed from Getty ImagesWhat This Means for U.S.-China Tech Relations
The deal highlights the complicated and often tense relationship between the U.S. and China over technology and trade. Chinese authorities have criticized Nvidia’s H20 chip for alleged flaws, while the U.S. aims to maintain control over critical technology transfers.
How this new tax will affect Nvidia and AMD’s competitiveness in China remains to be seen. It also creates a fresh dilemma for policymakers about how best to navigate technology exports without undermining national security or economic interests.
Nvidia and AMD’s Position
Both Nvidia and AMD have stated their commitment to following U.S. government regulations. They hope this agreement will allow them to remain competitive in the global AI chip market, including in China, despite the new financial obligations.
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