Nvidia and AMD have agreed to allocate 15% of their chip sales revenue in China to the U.S. government, as confirmed by a U.S. official on Sunday. This move, considered unusual, could unsettle American companies.
Following national security concerns, the Trump administration had previously halted the sale of advanced computer chips to China in April. However, in July, Nvidia and AMD disclosed that they were permitted to resume sales of H20 and MI308 chips, crucial for artificial intelligence development.
The anonymous official verified the revenue-sharing terms of the agreement to The Associated Press. Both companies reportedly accepted this financial arrangement as a prerequisite for obtaining export licenses to recommence sales to China. AMD, on Monday, announced the approval of its license applications by the U.S. government for exporting chips to China.
While Nvidia did not provide details on the specifics of the agreement or its reciprocal nature, the company stated its commitment to comply with the export regulations set by the administration. Nvidia emphasized the importance of following U.S. government rules for global market participation, expressing hopes for fair competition in China and worldwide.
The agreement drew criticism from the top Democrat on a House panel focusing on China competition, Representative Raja Krishnamoorthi. He labeled the reported deal as a “dangerous misuse of export controls,” undermining national security. Krishnamoorthi vowed to seek legal justifications for the arrangement and urged full transparency from the administration.
In a previous statement, Nvidia argued that stringent export controls would cost the company an additional $5.5 billion. The company highlighted the adverse impact of such limitations on U.S. competitiveness in a sector crucial for one of the world’s largest technology markets. Furthermore, it warned that U.S. export controls could drive other countries toward Chinese AI technology.
This revenue-sharing agreement with the U.S. government from China sales marks a rare move by a president and underscores Trump’s recent involvement in corporate decision-making. The administration’s push for companies to invest in the U.S. to bolster domestic jobs and manufacturing has been evident, with recent scrutiny directed at Intel’s CEO over Chinese ties.
The renewed sale of Nvidia’s chips in China, according to Commerce Secretary Howard Lutnick, is tied to a trade deal concerning rare earth magnets between the two countries. The restrictions on advanced chip sales to China have been pivotal in the AI competition between the leading economic powers, sparking debates on their necessity and potential loopholes.
While proponents argue for the necessity of these restrictions to maintain U.S. technological leadership, opponents raise concerns about innovation stifling. The emergence of China’s DeepSeek AI chatbot earlier this year reignited apprehensions over how China could leverage advanced chips to advance its AI capabilities.