Nvidia and AMD Obliged to Share 15% of Advanced Chip Sales to China with US Government

Nvidia and AMD Secure China Chip Sales with Revenue-Sharing Deal

In a surprising turn of events, Nvidia and Advanced Micro Devices (AMD) have reportedly struck a deal with the trump governance allowing them to resume sales of advanced computer chips to China. The agreement, while not yet officially announced, hinges on a critically important condition: the companies will remit 15 percent of the revenue generated from these sales back to the U.S. government.

Sources within the government, speaking on condition of anonymity, confirmed that Nvidia CEO Jensen Huang met with President Trump at the White House on Wednesday, where the agreement was finalized. This comes after the U.S. government halted exports of Nvidia’s H20 chips to China earlier this year, a move that significantly impacted the tech giant’s revenue stream.

The Financial Times initially reported the advancement, with Reuters subsequently confirming that the Commerce Department began issuing licenses for AI chip sales just two days after the Trump-Huang meeting. AMD’s MI308 chip is also now cleared for export to China,reversing a previous ban.

According to a U.S. official, the administration now believes that the sale of H20 and comparable chips dose not pose a substantial threat to national security. This shift in perspective paved the way for the negotiated agreement.

Nvidia acknowledged following U.S. government regulations regarding international market participation but stopped short of confirming the 15 percent revenue-sharing arrangement. In a statement, a spokesperson said, “While we haven’t shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide.”

AMD and the U.S. Department of Commerce have not yet responded to requests for comment.

The Chinese market is crucial for both Nvidia and AMD. Nvidia reported $17 billion in revenue from China in its fiscal year ending January 26, representing 13 percent of its total sales. AMD’s China revenue for 2024 reached $6.2 billion, accounting for a substantial 24 percent of its overall revenue. This deal underscores the importance of maintaining access to this key market,even under new financial constraints.

How does the 15% revenue share impact the long-term competitiveness of Nvidia and AMD in the global market?

The New Export Control Landscape: A Deep Dive

Recent developments have considerably altered the dynamics of the semiconductor industry, particularly concerning US-China trade relations. As of late 2025, both Nvidia and AMD are now mandated to share 15% of the revenue generated from sales of advanced chips to China with the US government. This policy stems from escalating concerns over national security and the potential for China to leverage advanced technologies for military applications. This isn’t a direct tax, but a revenue-sharing mechanism tied to export licenses for high-end GPUs and CPUs.

Understanding the Chips Affected: High-performance Computing & AI

The regulations primarily target advanced semiconductors crucial for artificial intelligence (AI) and high-performance computing (HPC). Specifically, this includes:

Nvidia’s H100 and A100 GPUs: These are leading processors used in data centers for AI training and inference.

AMD’s Instinct MI300 series: AMD’s competitor to Nvidia’s high-end GPUs, also vital for AI and HPC workloads.

Advanced CPUs: Certain high-end CPUs from both companies are also included, particularly those with important AI acceleration capabilities.

Chips exceeding performance thresholds: The US government has established specific performance benchmarks.Any chip exceeding these thresholds requires licensing and is subject to the 15% revenue share.

This isn’t a blanket ban on sales to China, but a controlled export policy designed to limit China’s access to the moast cutting-edge technology while still allowing for some level of commerce.The goal is to slow down China’s advancements in areas like AI-powered military systems and surveillance technologies.

Why the 15% Revenue share? The US Government’s Rationale

The decision to implement a revenue-sharing model,rather than a complete export ban,is multifaceted. Several key factors drove this policy:

National Security Concerns: The primary driver is preventing China from acquiring technologies that could enhance its military capabilities. Advanced chips are essential for developing sophisticated weapons systems, intelligence gathering, and cyber warfare tools.

Maintaining US Technological Leadership: The US aims to preserve its dominance in the semiconductor industry. By controlling the flow of advanced chips, the US hopes to maintain a technological edge.

Funding Domestic Semiconductor Production: The revenue generated from the chip sales will be reinvested into bolstering the US domestic semiconductor industry through initiatives like the CHIPS and Science act. This aims to reduce reliance on foreign manufacturing and strengthen supply chain resilience.

Avoiding Complete Economic Disruption: A complete ban could have severe economic consequences for both US chipmakers and the global economy. The revenue-sharing model allows for continued trade, albeit with a cost.

The CHIPS and Science Act Connection

The CHIPS and Science Act of 2022, which allocated billions of dollars to incentivize domestic semiconductor manufacturing, is directly linked to this export control policy. The revenue generated from the 15% share is intended to supplement the funding provided by the CHIPS Act, further accelerating the growth of the US semiconductor ecosystem.This includes funding for research and development, manufacturing facilities, and workforce training programs.

Impact on Nvidia and AMD: Financial Implications & Market Adjustments

The 15% revenue share will undoubtedly impact Nvidia and AMD’s financial performance.While both companies remain profitable, the policy will reduce their revenue from the chinese market.

Nvidia’s Response: Nvidia has already begun adapting by developing lower-powered chips specifically for the Chinese market that fall below the export control thresholds. This strategy aims to circumvent the revenue-sharing requirement while still serving a significant portion of the Chinese demand.

AMD’s Strategy: AMD is pursuing a similar approach, focusing on developing and selling chips that comply with the export regulations. They are also exploring alternative markets to offset potential losses in China.

Potential for Price Increases: To mitigate the impact of the revenue share, both companies may consider increasing prices on the advanced chips they are allowed to export to China.

Shift in Market Share: Chinese companies are actively investing in developing their own domestic semiconductor capabilities. this policy could accelerate that trend, potentially leading to a shift in market share over the long term.

China’s Reaction and Potential Countermeasures

china has expressed strong opposition to the US export controls, viewing them as a form of economic coercion and a violation of free trade principles.

* Investment in Domestic Chip Production: China is significantly increasing investment in its domestic semiconductor industry