Nvidia and AMD Agree to Pay 15% of Revenues from AI Chip Sales in China as Part of Historic Trade War Concession
Tech titan Nvidia finds itself in the crosshairs of global trade tensions, as President Trump’s escalating trade war with China has led to a unique arrangement. In exchange for being able to export high-end AI chips to China, Nvidia and fellow chipmaker AMD will pay the U.S. government a percentage of their revenues derived from sales in China.
This deal could serve as a compromise between two competing objectives of the Trump administration: maintaining America’s dominance in artificial intelligence while securing a critical trade agreement with China. It also presents an opportunity for the White House to generate substantial additional revenue.
In April, exports of specific AI chips – including Nvidia’s H20 and AMD’s MI308 – were halted by the U.S. government. However, this new deal allows these companies to secure export licenses and resume sales in China. A U.S. official confirmed the news to CNN, with The Financial Times reporting it first on Sunday.
Nvidia announced last month that they would restart sales of H20 chips to China following signs of openness from the Trump administration regarding AI chip exports. However, the 15% payment was an unexpected development. According to President Trump, Nvidia initially faced a proposed rate of 20%, but managed to negotiate it down to 15%.
This agreement came about following a meeting between Nvidia CEO Jensen Huang and President Donald Trump on Wednesday. Although export licenses were granted on Friday, no shipments have been made as yet.
A Nvidia spokesperson stated: “We adhere to the rules set by the U.S. government for our participation in worldwide markets. We had halted H20 chip sales to China for months and are hopeful that export control regulations will allow us to compete in China and globally.”
AMD has yet to comment on the matter.
Historically, governments have seized control of strategic companies when considered vital to national security interests. During the 2009 financial crisis, for instance, the U.S. government took control of General Motors and Chrysler, with the profits made from selling their shares going directly into the U.S. Treasury.
However, it is unclear if the U.S. government has ever demanded a percentage of a company’s business without taking an equity stake – or if such a move would be legal. The deal’s structure avoids being classified as a tax or tariff by being framed as a voluntary agreement. In this arrangement, Nvidia and AMD will send funds to the U.S. government without any control over how these funds are used.
Sarah Kreps, law professor and director of the Tech Policy Institute at Cornell University’s Brooks School of Public Policy, stated: “It’s hard to identify any historical precedent for this sort of arrangement.”
The U.S. government has sought to limit China’s access to advanced American technology in recent years, aiming to slow its progress on AI and expand the gap between the two nations. However, the Trump administration’s reversal on export controls may signal an acknowledgment that China is advancing in AI regardless, making it beneficial for American companies to participate. It could also provide the White House with another source of revenue, alongside tariffs.
Kreps noted: “It seems like there’s been some vacillation within the administration about and toward China, and I think that reflects the internal divide within the administration between the China hawks and the economic pragmatists. It seems like increasingly, the economic pragmatists are holding sway.”
This approach aligns with arguments from Nvidia’s Huang, who has stated that restricting sales of American AI chips is detrimental to U.S. national security. By allowing Chinese developers to create their own alternatives if they cannot buy American technology, China could potentially undermine U.S. leadership, according to Huang. The White House agrees with this perspective, believing it is preferable to have China utilizing a US-made chip through legitimate channels rather than resorting to the black market. China has been able to circumvent existing channels to obtain restricted chips in the past.
Significant questions remain about the origins of the 15% commission idea and its implications for national security. A U.S. official explained that the payment allows the administration to maintain control over the export process while generating revenue for the U.S. government. However, it remains unclear whether this penalty will effectively limit the flow of chips or address potential national security issues.
Scott Kennedy, senior adviser and trustee chair in Chinese business and economics at the Center for Strategic and International Studies, stated: “If there’s a legitimate national security concern about exporting these chips to China, then I don’t see how the payments to the U.S. government address those risks. In fact, they don’t at all.”
If no sufficient national security risk exists or if it can be adequately mitigated, Kennedy suggests that the U.S. government should step aside and allow American companies to operate without such conditions.
Nvidia released the H20 chip last year as a means of maintaining access to the Chinese market – which accounted for 13% of their sales in 2024 – amid U.S. export controls imposed by the Biden administration. While these chips have been widely believed to contribute to advanced Chinese AI models, their sale was halted in April due to export restrictions. Resuming shipments of the H20 to China could mean billions more dollars in revenue for Nvidia.