The White House confirmed on Monday that Nvidia and AMD have reached an agreement to share 15% of their revenue from sales to China with the US government, a move that has sparked debate over its potential impact on the two chipmaking giants and whether Washington might pursue similar deals with other companies.
Under the agreement, the companies will receive export licenses to sell Nvidia’s H20 chips and AMD’s MI308 chips in China, according to the Financial Times.
In a statement to NBC News, Nvidia said: “We follow the rules set by the US government for our participation in global markets. While we have not shipped the H20 to China for months, we hope export control rules will allow us to compete with China both domestically and globally. America cannot repeat the 5G mistake and lose its leadership in communications. US technology infrastructure in AI can be the global standard if we compete.”
AMD confirmed in a statement that its initial export license applications for MI308 chips to China had been approved.
Analysts speaking to CNBC described these arrangements, set by President Donald Trump’s administration, as “unusual,” but reflective of the current White House’s transactional nature. Investors generally view the step as positive for both companies, as it secures renewed access to the Chinese market.
Impact on Nvidia and AMD
The H20 chip from Nvidia was designed specifically to meet US export requirements for China and was previously banned under export restrictions, but the company announced last month it expected to receive licenses to ship the product to China.
In July, AMD also said it would resume exports of MI308 chips. At that time, there was no indication that resuming sales to China would be conditional or tied to a revenue share, and markets welcomed the move as reopening a multi-billion-dollar sales opportunity.
Despite both companies’ shares closing slightly lower on Monday, Ben Barringer, global technology analyst at Quilter Cheviot, told CNBC: “From an investor’s perspective, the outcome remains positive – getting 85% of the revenue is better than nothing. The question is whether Nvidia and AMD will raise their prices by 15% to offset the levy, but ultimately it’s better to sell in the market than leave it entirely to Huawei,” their closest Chinese competitor.
However, uncertainty remains over their long-term future. George Chen, co-chair of digital practice at The Asia Group, said: “In the short term, the agreement gives both companies some certainty over their exports to China. In the long term, we don’t know whether the US government will seek a larger share of their China business, especially if their sales there continue to grow.”
Analysts told CNBC the deal is “unusual” but consistent with Trump’s style. Barringer said: “It’s a good but strange move, the sort you’d expect from President Trump, who is at heart a dealmaker. He’s willing to compromise – but only if he gets something in return, and that sets an unusual precedent.”
Neil Shah, a partner at Counterpoint Research, described the revenue share as “an indirect tariff at the source.” Daniel Newman, CEO of The Futurum Group, wrote on X that the move resembled “a tax” on doing business in China.
Other analysts believe such deals are unlikely to extend to other companies. Nick Patience, head of AI at The Futurum Group, said: “I don’t expect it to extend to other sectors equally critical to the US economy, such as software and services.”
The US views the semiconductor industry as a strategic technology, forming the backbone of many other tools such as AI, consumer electronics, and even military applications. This is why Washington has placed chips under an export control regime unlike any other product. Chen from The Asia Group said: “The semiconductor industry is unique, and the pay-to-enter approach may work in Nvidia and AMD’s case because it’s essentially about getting US government export approval. For companies like Apple and Meta, the situation is more complicated given the nature of their business models and services in China.”
How Might China Respond?
Semiconductors have become a highly sensitive geopolitical topic. Over the past two weeks, China has expressed concern over the security of Nvidia chips.
Late last month, Chinese regulators asked Nvidia to “clarify” reports of potential security vulnerabilities and “backdoors.” Nvidia denied the existence of any backdoors granting access or control over its chips. More recently, the company again denied backdoors in its H20 chips after allegations from a social media account linked to Chinese state media.
Trump’s deal with Nvidia and AMD is likely to elicit mixed reactions in China – Beijing will be displeased with the arrangement, but Chinese companies will still seek to acquire these chips to advance their AI ambitions. Shah from Counterpoint Research said: “For China, it’s a dilemma – it needs these chips to boost its AI ambitions, but the US revenue levy could make them more expensive, and there are concerns about US backdoors, especially as Washington has approved supplying these chips to Chinese companies.”
