In a significant development within the semiconductor industry, leading U.S. chipmakers Nvidia and Advanced Micro Devices (AMD) have consented to allocate 15% of their revenue from artificial intelligence (AI) chip sales in China to the U.S. government. This arrangement is a prerequisite for obtaining export licenses necessary to sell their high-end AI chips—Nvidia’s H20 and AMD’s MI308—in the Chinese market.
Background and Context
The U.S. government’s decision to impose this revenue-sharing condition follows a series of export restrictions aimed at safeguarding national security interests. In April 2025, the Trump administration halted the sale of certain high-performance AI inference chips to China, citing concerns over potential misuse in military applications and espionage activities. However, this ban was partially lifted in July 2025, contingent upon the agreement that companies like Nvidia and AMD would share a portion of their sales revenue with the U.S. government.
Details of the Agreement
Under the terms of the agreement, Nvidia and AMD are required to remit 15% of the revenue generated from the sales of their respective AI chips in China. This financial arrangement is unprecedented in modern corporate trade practices and has sparked considerable debate among policymakers, industry experts, and legal scholars.
Industry Reactions
Nvidia has publicly stated its commitment to complying with U.S. export regulations. A company spokesperson emphasized the importance of maintaining America’s leadership in AI technology, drawing parallels to previous losses in telecommunications sectors. AMD has not issued a public statement regarding the agreement.
Legal and Ethical Considerations
The revenue-sharing deal has raised questions about its constitutionality and alignment with U.S. trade policies. Critics argue that linking export control policies to government revenue may set a dangerous precedent and could be perceived as a form of economic coercion. Legal experts have pointed out that the U.S. Constitution prohibits taxes on exports, suggesting that this arrangement may face legal challenges.
Implications for U.S.-China Relations
This agreement adds a new dimension to the ongoing trade tensions between the United States and China. While it allows U.S. companies to continue accessing the lucrative Chinese market, it also imposes financial burdens that could affect pricing strategies and competitiveness. Additionally, the deal may influence China’s approach to developing its own semiconductor industry, potentially accelerating efforts to achieve technological self-sufficiency.
Market Impact
Following the announcement, both Nvidia and AMD experienced slight declines in their stock prices, reflecting investor concerns over the potential financial impact of the revenue-sharing agreement. However, analysts suggest that maintaining access to the Chinese market, even with the 15% revenue share, is preferable to losing market share to competitors.
Conclusion
The agreement between Nvidia, AMD, and the U.S. government represents a complex intersection of trade policy, national security, and corporate strategy. As the global semiconductor industry continues to evolve, such arrangements may become more common, reflecting the intricate balance between economic interests and geopolitical considerations.
