Nvidia and AMD to Contribute 15% of China Chip Sales to US Government: What This Means for the Industry

Nvidia and AMD recently struck a deal with the U.S. government to share 15% of their chip sales revenue in China. This unusual agreement allows them to gain export licenses for their semiconductors. The deal surfaced after Nvidia’s CEO, Jensen Huang, met with President Trump.

To put things into perspective, export control experts say this type of revenue-sharing is unprecedented. No U.S. company has ever had to pay a percentage of their revenue just to get the necessary licenses. Historically, companies have focused on regulatory compliance without such financial agreements.

Analysts at Bernstein predict Nvidia could sell around 1.5 million H20 chips in China by 2025, potentially earning $23 billion. This comes amid ongoing tensions regarding the H20 chip, which was modified for the Chinese market after stringent export controls by President Biden. Back in April, Trump initially banned the exports but reversed that decision after discussions with Huang.

Experts, like Liza Tobin from the Jamestown Foundation, have raised red flags about the implications of this deal. She noted that it could empower the Chinese military by bolstering its AI capabilities. In a letter to Commerce Secretary Howard Lutnick, former officials warned that the H20 chip could be “a potent accelerator” for China’s technology military ambitions. Despite their concerns, Nvidia maintains that the fears are misplaced.

As the U.S. and China engage in trade discussions, the backdrop is complex. Tensions around export controls are rising, especially with reports suggesting Trump might ease restrictions to foster better relations with China. In this environment, Beijing is pushing for relaxed controls on high-bandwidth memory chips, critical for advanced AI production.

The situation poses difficult questions about national security and economic strategy. How will the U.S. manage its technological leadership while navigating complicated trade relations? These decisions may shape the landscape for years to come.

For further insights on export controls and their implications, you can check resources like the U.S. Commerce Department for the latest policies and developments.

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