Hajra Naz
NEW YORK — In a move without clear precedent in U.S. trade policy, Nvidia and AMD have agreed to hand over 15% of their revenues from semiconductor sales to China to the U.S. government. The arrangement, confirmed by President Donald Trump on Monday, is tied to the companies securing renewed export licenses for certain chips.
The deal follows the Trump administration’s April 2025 ban on the sale of advanced chips to China over national security concerns, a restriction aimed at slowing Beijing’s progress in artificial intelligence. In July, both companies disclosed that Washington had approved licenses for them to resume selling the Nvidia H20 and AMD MI308 chips—processors used extensively in AI development—under new conditions.
From 20% to 15%—Trump Credits Nvidia CEO for Negotiating
At a press conference, Trump described the unusual revenue-sharing requirement, saying he had initially demanded a 20% cut when Nvidia sought permission to sell what he called the “obsolete” H20 chip to China.
“So we negotiated a little deal. He’s selling an essentially old chip,” Trump said, crediting Nvidia CEO Jensen Huang for negotiating the rate down to 15%.
Nvidia declined to comment directly on the quid pro quo nature of the deal but said it would follow U.S. export rules.
“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,” the company said in a statement to the AP. “America cannot repeat 5G and lose telecommunication leadership. America’s AI tech stack can be the world’s standard if we race.”
Read More: 20 Security Experts Urge Trump Administration to Restrict Nvidia H20 Sales to China
Criticism From Both Parties
The deal has drawn sharp criticism from members of Congress, including leaders of the House Select Committee on China from both parties.
Rep. John Moolenaar (R-MI), the committee’s Republican chair, questioned the legality of the arrangement:
“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.”
Rep. Raja Krishnamoorthi (D-IL), the committee’s ranking Democrat, called it “a dangerous misuse of export controls that undermines our national security,” adding:
“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.”
Legal Concerns Over “Export Tax”
Trade experts have also questioned whether the arrangement would stand up to legal scrutiny.
Derek Scissors, senior fellow at the American Enterprise Institute, argued that the revenue share functions as a tax—something the Constitution limits in this context.
“There’s no precedent for this, probably because export taxes are unconstitutional. They call it a fee, but 15% of sales revenue is about as standard a tax as it comes. For this reason, I don’t think the arrangement is at all durable.”
Scissors warned that if such deals became common, they could either establish a new kind of de facto export tax or be applied selectively in “exceptional situations,” risking national security for short-term fiscal gain.
Billions at Stake
Nvidia had previously warned that strict export controls could cost it $5.5 billion in lost revenue, arguing that cutting off access to the Chinese market—one of the largest in the world for advanced computing—would harm U.S. competitiveness. The company has also cautioned that overreaching restrictions might push foreign buyers toward Chinese AI hardware instead.
In July, Commerce Secretary Howard Lutnick suggested the resumption of chip sales was tied to a broader trade agreement involving rare earth magnets, a critical component in many advanced technologies.
Read More: Nvidia Faces Billions in Losses Over New H20 Chip Licensing Rules
High-Stakes AI Race
Restrictions on advanced chip exports have become a central flashpoint in the U.S.–China AI rivalry. Supporters of the controls argue that they’re vital to preventing China from catching up technologically, while critics contend that they have loopholes and may even accelerate innovation in China.
Those fears intensified earlier this year with the debut of China’s DeepSeek AI chatbot, which renewed concerns over how Beijing could integrate advanced semiconductors into its own AI infrastructure.
For now, the Nvidia-AMD deal represents a highly unusual blending of national security policy and revenue-sharing—one that could set a precedent for future negotiations or be struck down entirely if legal challenges succeed.
