Nvidia and AMD Agree to Give US 15% Cut of China AI Chip Sales in Landmark Tech Trade Deal

In a move that has sent shockwaves through both the tech and political worlds, Nvidia and AMD have struck a groundbreaking agreement with the U.S. government—agreeing to hand over 15% of their revenue from AI chip sales to China. This arrangement comes as part of a deal to regain access to the lucrative Chinese market, which had been restricted under previous export bans over national security concerns.

The deal is historic for several reasons. For one, it’s the first time a U.S. administration has directly tied market access to a revenue-sharing requirement with private companies, effectively making the government a stakeholder in commercial tech sales. Traditionally, trade restrictions either allowed or prohibited exports entirely—this middle ground blurs the line between regulation and profit participation.

It’s also controversial. Supporters see it as a strategic win, ensuring the U.S. benefits financially from high-demand chip sales while maintaining oversight. Critics, however, argue it’s a dangerous precedent, possibly skirting constitutional limits on export taxes and raising questions about fairness, corporate independence, and long-term global trade relations.

For the global tech industry, this could be the opening chapter of a new era—where governments don’t just regulate international trade but actively share in the revenue it generates. The implications for future tech deals, supply chains, and geopolitical power plays are enormous, and the world will be watching closely to see how this experiment unfolds.

Background: The U.S.–China AI Chip Tensions

The roots of the current deal trace back to an escalating tech rivalry between the United States and China, centered on control over advanced computing technologies. At the heart of this conflict are AI accelerator chips—the high-performance processors essential for training and running complex artificial intelligence models. These chips, like Nvidia’s H100 and AMD’s MI300 series, are critical not only for commercial AI applications but also for military and surveillance systems.

The U.S. government first began restricting exports of certain high-end AI chips to China in 2022, citing national security concerns. Officials feared that these chips could be repurposed to strengthen China’s military capabilities, enhance state surveillance networks, or give Chinese firms a competitive edge in AI research and development. The restrictions tightened over the following years, effectively blocking the sale of Nvidia’s most advanced GPUs and forcing companies to design slower, “China-specific” versions of their products.

For Nvidia and AMD, the bans were a major blow. China represented a multibillion-dollar market—accounting for a significant share of revenue, especially in the AI and data center segments. Without access to Chinese buyers, both companies faced revenue shortfalls, stock market volatility, and increased competition from emerging domestic Chinese chipmakers.

The U.S., however, remained firm in its stance. Officials argued that keeping advanced AI hardware out of China was essential to maintaining America’s technological lead and preventing strategic tools from falling into the hands of potential adversaries. This hardline approach set the stage for intense negotiations, ultimately leading to the 15% revenue-sharing deal that now aims to balance economic opportunity with geopolitical caution.

Details of the 15% Revenue Cut Deal

Under the new agreement, Nvidia and AMD have been granted permission to sell specific AI chips to China that meet U.S. export compliance standards. The deal covers Nvidia’s H20 and AMD’s MI308—both designed as slightly downgraded versions of their flagship AI accelerators, engineered to comply with performance thresholds set by the U.S. government while still serving China’s growing AI market.

The 15% cut will be calculated based on gross sales revenue from these chips sold directly or indirectly to Chinese customers. This percentage will be remitted to the U.S. Treasury on a quarterly basis, with full audit oversight to ensure accurate reporting. It is effectively a government-imposed revenue share rather than a traditional export tax, sidestepping some legal hurdles while ensuring the U.S. directly benefits from the transaction.

Negotiations for this arrangement were anything but smooth. Sources close to the talks reveal that President Trump initially demanded a 20% share, framing it as a “national dividend” for allowing sensitive technology into a rival nation’s hands. Nvidia’s CEO Jensen Huang and AMD’s leadership pushed back, warning that such a high cut could make sales financially unviable and push Chinese customers toward local alternatives. After several rounds of discussions, the figure was reduced to 15%, which both companies deemed manageable enough to proceed.

The financial implications are significant. Analysts estimate that China’s AI chip market could generate $6–8 billion annually for Nvidia and $2–3 billion for AMD under the new permissions. At a 15% cut, the U.S. government stands to gain hundreds of millions in additional annual revenue, while the companies regain access to one of their most critical markets—albeit with slimmer margins.

Political & Economic Reactions

The announcement of the 15% revenue-sharing deal has ignited intense debate across political, economic, and tech circles.

Supporters’ View:

Proponents argue the U.S. has scored a strategic and financial victory. Not only does the agreement allow American companies to re-enter China’s AI chip market, but it also ensures that a significant portion of the profits flows back to the U.S. economy. Supporters believe this could become a blueprint for future tech trade deals, allowing the U.S. to maintain oversight of sensitive technologies while still participating in global markets. They also highlight that the added revenue could strengthen domestic semiconductor research, reduce dependency on foreign supply chains, and provide funds for national security initiatives.

Critics’ View:

Detractors warn that the deal may set a dangerous precedent, blurring the line between regulation and profit-sharing. Legal experts have raised concerns that this arrangement could be challenged under constitutional limits on export taxation, as Congress did not explicitly approve the revenue cut. Trade analysts worry it might violate World Trade Organization (WTO) rules or invite retaliatory measures from China, potentially sparking a fresh trade conflict. Some even argue that it risks weakening U.S. moral authority in advocating for free and fair trade practices globally.

Industry & Political Comments:

• Jensen Huang (Nvidia CEO) called the deal “a practical compromise” that safeguards U.S. security while supporting innovation.
• Lisa Su (AMD CEO) emphasized the importance of “market access with responsibility,” signaling her cautious acceptance.
• Senator Marco Rubio praised the deal as a “clever way to monetize national leverage,” while Senator Elizabeth Warren criticized it as “corporate favoritism” that benefits big tech over smaller U.S. firms.
• Economist Paul Krugman noted that while the U.S. gains short-term revenue, the long-term risks of politicizing trade “could be far more costly than the immediate payoff.”

The split reactions underscore a deeper tension: balancing economic opportunity with strategic caution in an era where technology, politics, and national security are more intertwined than ever.

Impact on Nvidia & AMD

Financial Projections – With vs. Without China Access:

Before this deal, Nvidia and AMD were facing the prospect of losing billions in potential sales due to U.S. export restrictions. China has been one of the fastest-growing markets for AI data center GPUs and high-performance computing chips, accounting for an estimated 20–25% of Nvidia’s AI chip revenue and around 15% for AMD.

• With China Access (and 15% cut): Both companies retain a major revenue stream, though slightly trimmed. Analysts project Nvidia could still earn $11–12 billion annually from China post-cut, while AMD might see $3–4 billion.
• Without China Access: Losses could have been severe—Nvidia’s annual revenue might have dropped by up to $8–10 billion, while AMD could have faced a $2–3 billion hit.

Risks of Dependency on Chinese Buyers:

While the agreement provides immediate relief, it also reinforces dependency on the Chinese market. Any future political fallout—such as sanctions, tariffs, or a renewed export ban—could abruptly sever this revenue source again. Moreover, China is aggressively developing domestic AI chip alternatives, meaning Nvidia and AMD could face long-term competition from homegrown rivals. Overreliance on a single market also makes the companies vulnerable to currency fluctuations, regulatory changes, and geopolitical risks.

Potential Strategic Pivots:

Both companies are already exploring ways to reduce this dependency:

• Diversifying Markets: Expanding AI chip sales to Southeast Asia, India, the Middle East, and South America, where AI adoption is growing.
• Domestic Focus: Increasing supply to U.S.-based AI labs, cloud providers, and research institutions, especially as federal funding for AI and supercomputing projects grows.
• Product Innovation: Developing AI chips optimized for regions with different regulatory requirements, allowing them to sidestep restrictions without losing competitive performance.

In short, the 15% deal may boost short-term revenues and market stability, but it forces Nvidia and AMD to walk a tightrope between profit and political risk. Strategic diversification will likely be their best defense against future shocks.

Implications for the Global Tech Industry

The 15% revenue-sharing deal between Nvidia, AMD, and the U.S. government could mark a turning point in how governments engage with global tech companies—potentially setting a new precedent for state involvement in international trade beyond traditional regulation.

Setting a Precedent for Revenue-Sharing Deals:

Historically, governments have regulated exports through tariffs, quotas, or outright bans, but direct revenue-sharing agreements are rare, especially in advanced technology sectors. This arrangement may encourage other nations to demand similar financial stakes from foreign companies seeking market access, fundamentally altering the balance between sovereign control and corporate independence. It raises questions about whether future trade deals might come with “pay-to-play” fees or profit-sharing components tied to geopolitical considerations rather than purely commercial terms.

Potential Reactions from Other Countries:

• China is likely to view the deal as an attempt to extract economic leverage under the guise of national security, possibly responding with countermeasures such as increased scrutiny on American tech firms operating in China, enhanced support for domestic chipmakers, or stricter import regulations on U.S. goods.
• The European Union (EU) and other allied nations will be watching closely. While some may appreciate the strategic intent behind controlling sensitive tech exports, they may also be concerned about the erosion of free trade principles and the potential for similar demands to affect their own industries. The EU’s emphasis on open markets and multilateral trade frameworks could clash with this emerging unilateral revenue-sharing model.

Impact on Semiconductor Supply Chains:

Semiconductor supply chains are already under strain due to geopolitical tensions, trade restrictions, and pandemic-related disruptions. The new deal could further complicate matters by:

• Encouraging companies to fragment their supply chains geographically, creating separate product lines tailored to different regulatory environments.
• Driving accelerated investment in localized chip manufacturing and design hubs to reduce exposure to politically sensitive regions.
• Increasing costs and complexity for companies that must comply with multiple overlapping trade regimes, potentially slowing innovation and raising prices for end users.

In essence, while the deal secures immediate U.S. strategic interests and opens doors for Nvidia and AMD, it also signals a more fragmented and politicized global tech landscape, where trade negotiations are no longer just about economics but also about wielding geopolitical influence.

What This Means for U.S.–China Tech Relations

The new revenue-sharing agreement between Nvidia, AMD, and the U.S. government marks a significant shift in the dynamics of U.S.–China tech relations. Rather than relying solely on outright export bans or trade restrictions, the U.S. is now adopting a more nuanced approach—combining market access with direct financial participation. This pivot from simple prohibitions to profit-sharing strategies signals a more complex, transactional model of engagement where technology, economics, and geopolitics are tightly interwoven.

This approach could reshape the ongoing tech rivalry by introducing new leverage points in negotiations. Instead of a zero-sum game where one side blocks the other’s technology, the U.S. government now has a vested interest in the commercial success of American chipmakers in China, while still maintaining some degree of control over sensitive exports. It may incentivize both parties to find middle ground on future disputes, but also risks creating tensions if China views the revenue cut as coercive or exploitative.

Looking ahead over the next 12 to 24 months, the AI chip market is poised for continued rapid growth, fueled by increasing demand in cloud computing, autonomous vehicles, and large language models. However, the flow of advanced chips into China will likely remain tightly regulated and contingent on political considerations. Nvidia and AMD may expand their “China-compliant” product lines, while domestic Chinese chipmakers will accelerate efforts to close the technology gap.

Overall, this deal sets the stage for a more strategic and transactional U.S.–China tech relationship, characterized by cautious cooperation amid underlying competition—a balance that will define the global semiconductor landscape in the near future.

Conclusion

The groundbreaking agreement requiring Nvidia and AMD to give 15% of their China AI chip sales revenue to the U.S. government represents a new chapter in the intersection of technology, trade, and geopolitics. This deal allows American chipmakers to regain access to a vital market while ensuring the U.S. government benefits directly from sensitive technology exports. However, it also raises important questions about legal boundaries, trade norms, and the future role of government in corporate profits.

Looking ahead, Nvidia and AMD will need to carefully navigate the challenges of maintaining growth in China amid shifting political landscapes and increasing competition from domestic Chinese firms. At the same time, this arrangement may set a precedent for similar revenue-sharing models in other sectors and countries, potentially reshaping global trade strategies.

Ultimately, the deal underscores the delicate balance between safeguarding national security and fostering business interests in an era where advanced technology is both a strategic asset and a commercial product. How governments and corporations manage this balance will profoundly influence the future of global technology leadership.

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