Nvidia and AMD to pay US 15 per cent cut on China chip sales
US chipmakers Nvidia and AMD have agreed to hand over 15 per cent of their Chinese revenues to Washington in exchange for the green light to resume sales of high-powered AI chips to the country, in what industry analysts have called an “unprecedented” arrangement.
The deal, first reported by the Financial Times, applies to Nvidia’s H20 and AMD’s MI308 chips – processors developed specifically for the Chinese market after the Biden administration’s 2023 export controls barred the sale of more advanced AI hardware to Beijing.
The Trump administration banned the H20 entirely in April but reversed course in June following lobbying from Nvidia boss Jensen Huang, who met US president Donald Trump last week.
Two days later, the US Commerce Department began issuing export licences.
Cash for clearance
Under the agreement, the Trump administration will take a cut of each chip sale – a move without precedent in US export control history.
Nvidia said it “follows rules the US government sets” for global trade but did not deny the terms. AMD has yet to comment.
While the White House has not explained how it will use the funds, critics argue the deal undermines national security concerns that led to the original ban.
“You either have a national security problem or you don’t”, said Deborah Elms of the Hinrich Foundation, warning that a revenue skim does little to address fears the chips could end up in Chinese military systems.
Security hawks, including former Trump administration officials, have warned the H20’s capabilities could accelerate China’s AI and defence projects.
Nvidia disputes the chips’ military utility, describing such claims as “misguided”.
Billions at stake
Bernstein analysts estimate Nvidia could sell 1.5m H20 units in China this year, generating around $23bn (£17.09) in revenue.
The stakes are high for both chipmakers, with China remaining a crucial market despite escalating tech trade tensions.
The arrangement comes amid early signs of a broader thaw in US-China trade relations taking place, including a 90-day tariff truce and mutual easing of some export restrictions.
But concerns persist in Washington that Beijing could push for further concessions on high-bandwidth memory chips – a critical AI component.
For Nvidia, the deal reopens access to a vast customer base, even as it faces scrutiny from both US and Chinese regulators.
Beijing’s cyberspace watchdog recently questioned whether the H20 contained backdoor security risks, claims Nvidia denies.