Nvidia and AMD to Pay U.S. Government 15% of China Chip Sales

Nvidia and AMD have agreed to share 15% of the revenue they generate from chip sales to China with the U.S. government, as a condition for obtaining the export licenses they need to sell those semiconductors, Associated Press reported.

The deal covers two specific chips: Nvidia's H20 and AMD's MI308, both designed for artificial intelligence development. The Trump administration halted sales of advanced chips to China in April over national security concerns, but in July both companies revealed that Washington would allow them to resume those sales.

Trump confirms the terms and takes credit for the negotiation

President Trump confirmed the details of the unusual arrangement at a press conference on Monday. He explained that he initially asked for 20% of sales revenue when Nvidia sought permission to sell the H20 to China, a chip he himself called "obsolete." Trump credited Nvidia CEO Jensen Huang with getting that figure down to 15%.

"So we negotiated a little deal. So he's selling a essentially old chip," Trump said.

Nvidia declined to comment on the specific details of the agreement or its nature as a quid pro quo, but said it would abide by the export rules set by the administration. In a statement to the AP, the company said: "We follow rules the U.S. government sets for our participation in worldwide markets. While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide. America cannot repeat 5G and lose telecommunication leadership. America's AI tech stack can be the world's standard if we race." AMD did not immediately respond to the AP's request for comment.

Export controls turned into a revenue stream

The scheme has raised alarms in Congress, and not only among the White House's usual critics. Republican Rep. John Moolenaar, chair of the House Select Committee on China, warned: "There are questions about the legal basis for doing so. Export controls are a frontline defense in protecting our national security, and we should not set a precedent that incentivizes the government to grant licenses to sell China technology that will enhance its AI capabilities."

The committee's top Democrat, Rep. Raja Krishnamoorthi, went further, calling the deal "a dangerous misuse of export controls that undermines our national security." Krishnamoorthi said he would demand answers about the legal basis for the arrangement and full transparency from the administration: "Our export control regime must be based on genuine security considerations, not creative taxation schemes disguised as national security policy. Chip export controls aren't bargaining chips, and they're not casino chips either. We shouldn't be gambling with our national security to raise revenue."

Derek Scissors, a senior fellow at the American Enterprise Institute and a China expert, took direct aim at the deal's constitutionality: "There's no precedent for this, probably because export taxes are unconstitutional. They call it a fee, but 15% of sales revenue is about a standard a tax as it comes. For this reason, I don't think the 'arrangement' is at all durable." Scissors added that if the scheme were to last, it would leave two possible readings: either there is now an export tax that major companies and strategic products must begin to factor in, or that tax only applies in exceptional situations tied to changes in export controls. In that second case, he said, "we'd risk national security for the sake of tax revenue, which is effectively the same as cutting the defense budget."

The trade backdrop and the cost to Nvidia

In July, Nvidia had argued that strict export controls would cost the company an additional $5.5 billion. The company contends that such restrictions hurt U.S. competitiveness in one of the world's largest tech markets, and warns that U.S. export controls could end up pushing other countries toward Chinese AI technology.

Commerce Secretary Howard Lutnick told CNBC in July that the resumption of Nvidia's chip sales in China was linked to a trade agreement between the two countries over rare earth magnets.

Restrictions on sales of advanced chips to China have long been central to the AI race between the world's two largest economies, and remain a contentious issue. Supporters argue they are necessary to slow China down enough for U.S. companies to keep their edge. Critics counter that the controls have loopholes and could still fuel Chinese innovation despite them. The emergence of the DeepSeek chatbot in January renewed concerns in particular about how Beijing might leverage advanced chips to develop its own AI capabilities.