Nvidia and Advanced Micro Devices (AMD) have agreed to give the U.S. government 15% of revenue from sales of certain advanced computer chips to China, a move confirmed by a U.S. official on Sunday. The deal stands out as an uncommon requirement for American companies and could unsettle the technology sector, which is already navigating tightening export rules.
Earlier this year, the Trump administration suspended exports of Nvidia’s H20 artificial intelligence chips to China, citing export control concerns. Last month, Nvidia announced that U.S. officials had approved a plan for sales to resume, with deliveries expected to restart soon.
Licensing Resumes for AI Chip Exports
By Friday, the Commerce Department had started issuing export licenses for the H20 chips. While details of the arrangement have not been made public, the agreement appears to be tied to Washington’s aim of keeping U.S. technology competitive in China while ensuring the federal government benefits financially from the trade.
Market reaction was swift. Nvidia’s shares fell about 1% and AMD’s declined nearly 2% in premarket trading on Monday, as analysts warned the 15% levy could reduce margins for both companies.
Trump’s Interventionist Trade Approach
The decision reflects President Donald Trump’s hands-on approach to corporate and trade policy. He has consistently urged technology companies to boost U.S. manufacturing and has criticized executives with close business ties to China.
Just days before the announcement, Trump publicly called for Intel’s new CEO Lip-Bu Tan to step down over alleged conflicts linked to Chinese firms.
In this case, administration officials have stated that allowing the sale of H20 and similar chips to China does not compromise national security.
Industry Concerns Over Policy Logic
The decision has drawn mixed reactions from policy experts. Some question whether imposing a financial penalty aligns with the stated rationale for export controls. Nvidia has said it follows all U.S. rules governing global markets and has not shipped H20 chips to China in months. The company added that it hopes U.S. policy will continue to allow fair competition worldwide, including in China.
Billions in Potential Revenue at Stake
China remains a crucial market for both companies. Nvidia previously warned that being blocked from selling H20 chips there could cost it $8 billion in sales for the July quarter. AMD forecast a $1.5 billion revenue loss this year under similar restrictions.
Industry analysts believe the companies likely agreed to the 15% revenue share as a strategic compromise to keep access to the market. While the decision could secure long-term relationships with Chinese buyers, it also sets a precedent for future export-linked financial conditions.
China’s Response and Broader Trade Context
China’s foreign ministry reiterated on Monday its opposition to U.S. export restrictions, saying Washington has used technology and trade measures to “maliciously contain and suppress China.”
According to The Financial Times, the revenue-sharing requirement was part of the condition for granting export licenses for certain chips, including AMD’s MI308 model. The report said the Trump administration had not yet finalized how it would allocate the collected funds.
Part of Larger U.S.–China Tech Negotiations
Commerce Secretary Howard Lutnick has described the resumption of chip sales as part of broader talks with China that also involve securing supplies of rare earth minerals essential for electronics manufacturing. He has noted that while the H20 is an advanced processor, it is not among Nvidia’s most sensitive products.
The strategy, according to Lutnick, is to keep Chinese companies reliant on U.S. technology stacks—even if the highest-performance chips remain restricted—so that American standards and ecosystems maintain influence.
Implementation Still Unclear
While the 15% levy is confirmed, there is no timeline for when or how the arrangement will be enforced. Officials have said the plan will comply with U.S. law, but critics argue that it risks trading away national security safeguards for financial gain.
Nvidia earned $17 billion in revenue from China in its last fiscal year, about 13% of total sales. AMD reported $6.2 billion from China in 2024, or roughly 24% of its overall revenue.
Analysts from Bernstein estimate that the new levy could cut gross margins for the affected products by 5 to 15 percentage points, translating to about a one-point hit to each company’s overall gross margins.
