US semiconductor giants NVIDIA and Advanced Micro Devices (AMD) have agreed to pay the American government 15% of their revenues from artificial intelligence chip sales to China in exchange for export licenses, the White House confirmed on Monday. The arrangement, negotiated directly by President Donald Trump, marks an unprecedented departure from traditional national security-based export controls.
The deal specifically covers NVIDIA's H20 AI accelerator and AMD's MI308 chips, both of which had been banned from export to China since April 2024. Trump revealed he initially sought a 20% revenue share but settled for 15% after negotiations with NVIDIA CEO Jensen Huang, whom he met last Wednesday.
"We follow rules the US 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," NVIDIA said in a statement. AMD confirmed that its initial license applications to export MI308 chips have been approved but did not comment on the revenue-sharing arrangement.
The financial implications are substantial. Combined, the two companies could earn up to $35 billion annually from these chip sales to China, potentially generating around $5 billion in government revenue, according to CFRA Research estimates. NVIDIA had previously taken a $4.5 billion writedown due to excess H20 inventory following the April export ban.
However, the deal has drawn sharp criticism from trade and legal experts. Peter Harrell, former White House senior director for international economics under the Biden administration, argued that "the US Constitution flatly forbids export taxes." Christopher Padilla, a former export control official, described the arrangement as "unprecedented and dangerous," adding that "export controls are in place to protect national security, not raise revenue for the government."
Analysts view the deal positively for both companies as it provides access to China's massive AI market, though questions remain about whether the arrangement might extend to other sectors. The Commerce Department began issuing licenses for the H20 chip last week, though no shipments have been made yet.
The arrangement highlights the Trump administration's approach of monetising trade relationships while potentially softening restrictions on technology exports to China, America's primary competitor in artificial intelligence development.