In a landmark agreement that reflects the growing complexities of global technology trade, chipmakers Nvidia and AMD have agreed to pay the United States government 15% of their semiconductor sales revenue from China. This move is part of a deal to secure export licenses for sales in the world’s second largest economy.
The arrangement specifically applies to Nvidia’s H20 chips and AMD’s MI308 chips, both critical for artificial intelligence applications. According to reports, Nvidia will pay 15% of its H20 chip revenues from China to the US, while AMD will follow the same percentage for MI308 chip sales.
While Nvidia has not shipped the H20 chip to China for several months, the company expressed optimism about the new export control rules. “We observe the rules that the US government establishes for our participation in global markets. “We hope that export control rules will allow America to compete in China and around the world,” Nvidia said in a statement.
An Unprecedented Arrangement
Industry analysts have called this agreement unusual. Charlie Dai, Vice President and Principal Analyst at Forrester, described it as “unprecedented,” highlighting the high cost of market access amid escalating tech trade tensions. “It creates substantial financial pressure and strategic uncertainty for tech vendors,” he noted.
The H20 chip was initially developed for China after the Biden administration imposed export restrictions in 2023. However, sales were effectively banned earlier this year under the Trump administration. Following months of lobbying from Nvidia CEO Jensen Huang, who reportedly met with President Donald Trump, sales are now set to resume.
Balancing Trade and Security Concerns
Not everyone is convinced the arrangement addresses underlying security issues. Deborah Elms, Head of Trade Policy at the Hinrich Foundation, questioned the logic, stating, “If you have a national security problem, a 15% payment doesn’t somehow eliminate it.”
The resumption of chip sales comes as Washington and Beijing show signs of easing tensions. China has recently relaxed rare earth export controls, while the US has lifted certain restrictions on chip design software firms in China. Both countries agreed to a 90 day truce in their ongoing tariff disputes in May, although it remains uncertain whether the pause will be extended beyond the August 12 deadline.
US Push for Domestic Tech Investment
This agreement also aligns with broader US efforts to boost domestic technology production. Recently, Apple pledged an additional $100 billion investment in the US, adding to a previous commitment of $500 billion over four years. Memory chip giant Micron Technology announced $200 billion in US investments, including a new facility in Idaho.
Nvidia itself has revealed plans to build AI servers worth up to $500 billion in the United States, aiming to develop the first fully American made AI supercomputers.
As global trade policies shift, this deal between Nvidia, AMD, and the US government underscores the delicate balance between maintaining competitive market access and addressing national security concerns in the high stakes semiconductor industry.
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