Nvidia and AMD have reportedly agreed to remit 15% of their Chinese revenues to the U.S. government, according to the BBC, in what is being described as an “unprecedented” arrangement to secure export licenses for sales to China.
The U.S. had previously implemented export controls, typically reserved for national security concerns, to restrict the sale of advanced chips used in artificial intelligence (AI) and other sectors to China.
Security experts, including some former officials from the Trump administration, recently voiced “deep concern” over Nvidia’s H20 chip, arguing that it could significantly enhance China’s AI capabilities.
In a statement to the BBC, Nvidia affirmed, “We follow rules the US government sets for our participation in worldwide markets.”
The company added, “While we haven’t shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide.”
AMD has not yet responded to requests for comment. The White House also declined to comment.
The agreement has sparked debate in the U.S., with critics raising security concerns and questioning the administration’s handling of private sector engagement.
Deborah Elms, head of trade policy at the Hinrich Foundation, stated, “You either have a national security problem or you don’t.”
She added, “If you have a 15% payment, it doesn’t somehow eliminate the national security issue.”
Under the terms of the agreement, Nvidia will remit 15% of its revenues from H20 chip sales in China to the U.S. government.
AMD will also contribute 15% of revenue generated from sales of its MI308 chip in China to the Trump administration, as initially reported by the Financial Times.
The arrangement has been met with mixed reactions online, with some investors labeling the deal a “shakedown” and others drawing comparisons to an export tax – a practice widely considered illegal in the U.S.
Peter Harrell, a fellow at the Carnegie Endowment for International Peace and former Biden administration official, commented, “Regardless of whether you think Nvidia should be able to sell H20s in China, charging a fee in exchange for relaxing national security export controls is a terrible precedent.”
He further stated, “In addition to the policy problems with just charging Nvidia and AMD a 15% share of revenues to sell advanced chips in China, the US Constitution flatly forbids export taxes.”
Democratic congressman Jake Auchincloss expressed concern, stating, “Now the US government is financially motivated to sell AI to China? Makes me shudder to think what a TikTok deal might look like.“
The H20 chip was specifically designed for the Chinese market in response to U.S. export restrictions imposed by the Biden administration in 2023.
However, sales of the chip were effectively blocked by the Trump administration in April of this year.
Beijing has previously criticized the U.S. government, accusing it of “abusing export control measures, and engaging in unilateral bullying.”
Nvidia’s CEO, Jensen Huang, has reportedly spent months lobbying both U.S. and Chinese officials for a resumption of chip sales in China, and reportedly met with President Trump last week.
Charlie Dai, vice president and principal analyst at Forrester, described the agreement as “unprecedented,” highlighting the financial and strategic implications for tech vendors.
“The arrangement underscores the high cost of market access amid escalating tech trade tensions, creating substantial financial pressure and strategic uncertainty for tech vendors,” he noted.
In a recent letter to U.S. Commerce Secretary Howard Lutnick, a group of security specialists argued that while civilian companies are the primary buyers of Nvidia’s H20 chips in China, they anticipate the technology will be utilized by the military.
They wrote, “Chips optimized for AI inference will not simply power consumer products or factory logistics; they will enable autonomous weapons systems, intelligence surveillance platforms and rapid advances in battlefield decision-making.”
Nvidia conveyed in their statement to the BBC, “America cannot repeat 5G and lose telecommunication leadership. America’s AI tech stack can be the world’s standard if we race.”
The potential resumption of chip sales to China coincides with a period of easing trade tensions between Beijing and Washington.
Beijing has eased restrictions on rare earth exports, while the U.S. has lifted restrictions on chip design software firms operating in China.
In May, the world’s two largest economies agreed to a 90-day truce in their tariffs war.
Since then, high-ranking trade officials from both countries have met on several occasions, although a formal agreement to extend the tariff pause is pending confirmation before the August 12th deadline.
As part of his trade policy, Trump has urged major corporations to increase investments within the U.S.
Last week, Apple announced an additional $100 billion (£74.4bn) investment in the U.S., adding to its existing pledge to invest $500 billion over the next four years.
In June, memory chip manufacturer Micron Technology disclosed that its planned investments in the U.S. would total $200 billion, encompassing the construction of a new manufacturing facility in Idaho.
Nvidia has similarly announced intentions to construct AI servers in the U.S. with a value of up to $500 billion, pledging to create the first entirely American-made AI supercomputers.
Meanwhile, The Wall Street Journal reported that Intel’s CEO is scheduled to meet with Trump at the White House, following the president’s call for his immediate resignation due to his connections to China.
Last week, Trump stated on social media that Lip-Bu Tan was “highly conflicted”, referencing his alleged investments in companies purportedly linked to the Chinese military.
Mr. Tan has refuted the claims, labeling them as “misinformation.”
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