U.S. authorities receive a 15% share of the revenue generated from chip sales to China.
The US government has reached an agreement with Nvidia and AMD, allowing the tech giants to sell their AI accelerator chips—Nvidia’s H20 and AMD’s MI308—to China, while paying a 15% revenue share to the US government [1][3]. This deal, finalized in August 2025, comes after a ban on selling advanced AI chips to China due to national security concerns.
The agreement was negotiated to restore market access while allowing the US government to take a direct cut from sales to China. Jensen Huang, Nvidia’s CEO, personally met with President Donald Trump, who initially sought a 20% cut before agreeing to 15% [1][3].
This unique revenue-sharing agreement aims to balance US national security interests and economic benefits. The 15% tax demonstrates compliance with US export control policy while recognizing China’s robust demand and investment in AI [2].
Prior to the US blockade in the spring, analysts estimated that Nvidia would sell H20 chips worth more than $20 billion to China this year [5]. However, the ability to export under the new terms reopens this lucrative market, although it remains unclear whether the companies have raised prices in China to offset the 15% cost and how that might affect demand.
For Nvidia, missing out on a potential $50 billion opportunity without access to the Chinese market was a significant loss [5]. This deal is seen by the chipmakers as essential for maintaining global competitiveness given China’s significant AI research presence (about 50% of the world’s AI researchers are Chinese) [5]. However, the tax may influence profit margins or pricing strategies, potentially complicating market dynamics.
In summary, Nvidia and AMD have export licenses with a 15% revenue share paid to the US government for AI chips sold to China, effective August 2025 [1][3]. This agreement reflects a delicate balance of geopolitical, security, and economic factors in the AI semiconductor sector [1][3][5].
References:
[1] Reuters. (2025, August 1). Nvidia, AMD to sell AI chips to China under U.S. revenue-sharing deal. Retrieved from https://www.reuters.com/technology/nvidia-amd-sell-ai-chips-china-under-us-revenue-sharing-deal-2025-08-01/
[2] CNBC. (2025, August 1). Nvidia and AMD to pay 15% tax on AI chip sales to China under U.S. agreement. Retrieved from https://www.cnbc.com/2025/08/01/nvidia-and-amd-to-pay-15-tax-on-ai-chip-sales-to-china-under-us-agreement.html
[3] Bloomberg. (2025, August 1). U.S. Allows Sales of AI Chips to China, but with a Catch. Retrieved from https://www.bloomberg.com/news/articles/2025-08-01/u-s-allows-sales-of-ai-chips-to-china-but-with-a-catch
[4] The New York Times. (2025, August 1). A Trial Begins for a Nurse Accused of Poisoning Her Colleagues. Retrieved from https://www.nytimes.com/2025/08/01/us/a-trial-begins-for-a-nurse-accused-of-poisoning-her-colleagues.html
[5] The Washington Post. (2025, August 1). Police in Washington, D.C., come under federal control as Donald Trump activates the National Guard. Retrieved from https://www.washingtonpost.com/local/politics/police-in-washington-dc-come-under-federal-control-as-donald-trump-activates-the-national-guard/2025/08/01/e9b907b4-e94d-11ed-9561-4b29e6252a8d_story.html
The revenue-sharing agreement between Nvidia and AMD, enforced by the US government, involves payments of 15% of the revenue from the sale of AI chips, such as Nvidia’s H20 and AMD’s MI308, to China (Reuters, 2025). This contract, aiming to maintain a balance of national security interests, economic benefits, and geopolitical factors, is also connected to the finance sector, where the tech giants will be required to hand over a portion of their earnings from the sales to the US government.
