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Nvidia and AMD have agreed to hand over 15% of their revenue from certain chip sales to China to the U.S. government, in a first-of-its-kind arrangement that allows the companies to resume exports of advanced semiconductors to the Chinese market.
The agreement, confirmed by U.S. officials and first reported by the Financial Times, grants both firms export licenses for Nvidia's H20 and AMD's MI308 chips, products that had been blocked under Washington's national security-driven export restrictions. These chips are used in artificial intelligence applications, an area the U.S. sees as strategically sensitive due to its military potential.
Nvidia said it complies with U.S. government rules for global sales and has not shipped H20 chips to China for months, but hopes to compete in the market under the new arrangement. AMD has not issued a formal statement on the deal.
Security experts have raised concerns that these high-performance chips could enhance China's military capabilities, powering systems such as autonomous weapons, surveillance networks, and advanced battlefield decision-making tools. The Biden administration originally introduced export curbs in 2023, which were later tightened by President Donald Trump earlier this year.
Analysts describe the 15% revenue transfer as "unprecedented" and "unusual," calling it an indirect tariff that reflects the transactional style of the current White House. While it imposes a cost on the companies, many in the investment community see it as a net positive, since regaining access to China, one of the world's largest semiconductor markets, is worth far more than the lost margin.
It is unclear whether other industries could face similar "pay-to-play" arrangements, but experts suggest the semiconductor sector is unique due to its dual civilian and military uses.
The deal comes amid a temporary easing of U.S.-China trade tensions. Recent moves include Beijing relaxing rare earth export controls and Washington loosening restrictions on chip design software sales. However, uncertainty remains over whether the 90-day tariff truce, set to expire on August 12, will be extended.
China has not yet officially responded to the revenue-sharing agreement, though state media has criticized Washington's approach. Despite political friction, Chinese companies are expected to continue pursuing U.S.-made chips to support their AI ambitions, even if the cost is higher under the new arrangement.
