Unprecedented: US demands revenue share for China AI chip exports

In a striking departure from traditional trade policy, the Trump administration has brokered an unprecedented agreement with leading U.S. chipmakers Nvidia and Advanced Micro Devices (AMD), allowing them to resume sales of specific artificial intelligence chips to China under the condition that they remit a portion of their revenues to the U.S. government. The deal requires both companies to pay 15% of the revenue generated from the sale of these high-tech components in the Chinese market as a prerequisite for obtaining export licenses. This development marks a significant pivot in U.S. tech policy, blending national security-driven export controls with a novel revenue-generating mechanism that has drawn both praise and sharp criticism from industry observers and trade law experts.

The agreement centers on Nvidia’s H20 and AMD’s MI308 AI chips, both of which were designed specifically for the Chinese market to comply with earlier, less stringent U.S. export restrictions.[1][2] These chips, while less powerful than their top-tier counterparts sold elsewhere, are still critical for developing AI applications. The deal came about after the Trump administration first imposed a ban on the H20 chip in April, citing national security risks, a move that followed tougher controls implemented by the preceding Biden administration.[3][4] The recent reversal and the subsequent licensing agreement reportedly materialized following a meeting between Nvidia's chief executive, Jensen Huang, and President Trump, after months of intense lobbying by the industry.[5][6] While AMD has not commented publicly, Nvidia issued a statement confirming its adherence to U.S. government regulations for global market participation, without explicitly confirming the 15% arrangement.[5][7]

The nature of this quid pro quo has been described by analysts as highly unusual and without precedent in the history of U.S. export controls.[3][1][2] Traditionally, such controls are implemented purely on national security grounds, either permitting or denying the sale of sensitive technologies to foreign adversaries.[3] The introduction of a financial concession as a condition for approval blurs the lines between national security imperatives and economic strategy.[5] Critics have voiced significant concerns, labeling the deal a "political tariff in everything but name" and likening it to a "protection racket."[1] Some legal experts and former government officials have questioned its constitutionality, suggesting it functions as an export tax, which is forbidden by the U.S. Constitution.[3][2] Christopher Padilla, a former top commerce official, described the arrangement as "unprecedented and dangerous," arguing that it could be perceived as "bribery or blackmail, or both."[3] These critics worry the policy could undermine the credibility of U.S. export controls and complicate efforts to maintain a united front with allies who have been pressed by Washington to adopt similar restrictions on tech sales to China.[2][8]

The financial and strategic implications of the deal are substantial for all parties involved. For Nvidia and AMD, access to the vast Chinese market is crucial; China accounted for approximately 13% of Nvidia's revenue in its last fiscal year and 24% of AMD's in 2024.[5][9] The resumption of sales, even with the 15% revenue share, is seen as a significant opportunity. Based on company projections, the U.S. government could collect hundreds of millions, or even billions, of dollars annually from this arrangement.[5][10] One analyst estimated that Nvidia could sell about $15 billion worth of H20 chips to China, which would translate to over $2 billion for the U.S. Treasury.[9][10] However, it remains unclear how the administration plans to allocate these funds.[5][7] The deal also poses challenges, as Chinese state media have reportedly been critical of the H20 chip's performance and have raised concerns about potential security "backdoors," a claim Nvidia denies.[1][8] This arrangement occurs as domestic Chinese competitors like Huawei continue to expand their share of the local AI chip market.[8]

In conclusion, the revenue-sharing agreement between the U.S. government and its top chipmakers represents a paradigm shift in foreign trade and national security policy. By tying export licenses for critical AI technology to direct financial payments, the Trump administration has introduced a transactional approach to a domain previously governed by stricter, non-monetary rules. While the deal reopens a vital market for Nvidia and AMD and creates a new revenue stream for the U.S. Treasury, it also ignites a fierce debate over its legality, its long-term impact on the integrity of U.S. national security policy, and its potential to reshape the dynamics of the global tech competition between the United States and China. The success and consequences of this unorthodox strategy will be closely watched by industries and governments worldwide.