Nvidia and AMD’s 15% China Revenue Deal: What It Means
Explore how Nvidia and AMD’s groundbreaking 15% revenue-sharing deal with the U.S. government reshapes chip exports to China, blending trade, technology, and legal challenges in today’s global market.
Key Takeaways
- Nvidia and AMD agreed to pay 15% of China chip sales revenue to the U.S. government.
- The deal allows export licenses for AI chips Nvidia H20 and AMD MI308 in China.
- Legal experts question the deal’s constitutionality under the Export Clause.
- The revenue aims to reduce U.S. national debt and balance trade interests.
- This unprecedented arrangement signals a new era of transactional trade policy.
In a move that’s rewriting the rules of global tech trade, Nvidia and AMD have agreed to hand over 15% of their revenue from AI chip sales in China to the U.S. government. This unusual revenue-sharing deal, born from tense U.S.–China trade relations and national security concerns, lets these chipmakers keep selling their Nvidia H20 and AMD MI308 processors in the lucrative Chinese market. But this isn’t just a business transaction—it’s a legal and geopolitical tightrope walk. With constitutional questions swirling and the U.S. government eyeing the funds to chip away at national debt, this deal is a bold experiment in balancing economic opportunity with security. Let’s unpack what this means for the chip industry, trade policy, and the future of tech exports.
Navigating Export Controls
Imagine being caught between two giants—on one side, the promise of a booming market; on the other, the iron grip of national security. That’s the tightrope Nvidia and AMD are walking with their China chip sales. For years, the U.S. government slammed the brakes on exporting advanced AI chips to China, fearing these powerful processors could fuel military tech. The April 2025 ban on Nvidia’s H20 chip was a stark example, slashing $2.5 billion from its Q1 revenue. But the story didn’t end there. Instead of a total shutdown, a new path emerged: a revenue-sharing deal that lets these companies sell certain chips while paying 15% of those sales back to the U.S. Treasury. This shift from outright bans to a transactional model reflects a nuanced approach—balancing economic interests with security concerns. It’s a fresh chapter in export controls, where access comes at a price and the rules of engagement are being rewritten.
Decoding the Revenue Sharing Deal
The headline grabber here is simple: Nvidia and AMD will pay 15% of their China chip sales revenue to the U.S. government. But beneath that number lies a complex negotiation. Initially, President Trump pushed for a 20% cut, but the final deal settled at 15%. The chips involved—Nvidia’s H20 and AMD’s MI308—aren’t just any processors; they’re tailored to meet U.S. export restrictions, designed as “compliance” models. Some insiders and Trump himself have called them “essentially old chips,” hinting they’re less cutting-edge than the latest tech. This deal is unprecedented—no U.S. company has ever agreed to share export revenues like this before. It’s a bold experiment in trade diplomacy, where companies accept a slice of their sales to keep doors open in a critical market. For Nvidia and AMD, it’s a strategic trade-off: pay the government to play, rather than lose the game entirely.
Legal Storm Clouds Ahead
Here’s where the plot thickens. The U.S. Constitution’s Export Clause forbids taxes or duties on exports, a rule rarely tested but fiercely upheld by the Supreme Court. This revenue-sharing deal, effectively a tax on exports, raises red flags among legal experts. The 2018 Export Control Reform Act adds another layer, banning fees for export license processing. Critics argue there’s no legal foundation for demanding a cut of company revenues in exchange for licenses. As of August 2025, the deal’s legal footing remains shaky, with potential court battles looming. This isn’t just a business issue—it’s a constitutional test. The outcome could redefine how far the government can go in regulating exports and extracting value from private companies. For now, Nvidia and AMD are pioneers on uncharted legal terrain.
Economic and Industry Impacts
For Nvidia and AMD, the stakes are high. Losing the Chinese market outright would have been a financial blow, but this deal offers a lifeline—albeit at a cost. Selling “less advanced” chips under strict rules means they can maintain a foothold without fully sacrificing profits. The U.S. government, meanwhile, gains a new revenue stream earmarked by Treasury Secretary Scott Bessent for reducing national debt. It’s a creative workaround that turns trade restrictions into a source of federal funds. Yet, this arrangement also raises concerns about “crony capitalism,” where government power negotiates bespoke deals with mega-corporations. Chinese authorities have voiced worries about chip security but haven’t retaliated publicly. The deal’s ripple effects could influence future trade negotiations and industry strategies, signaling a shift toward more transactional and interventionist policies in high-tech sectors.
Shaping Future Trade Policies
This Nvidia and AMD deal isn’t just a one-off—it’s a potential blueprint for how the U.S. might handle sensitive exports going forward. Officials have hinted that similar revenue-sharing or “golden share” arrangements could apply to other strategic industries. But given the legal controversies and political pushback, expanding this model faces hurdles. The deal also reflects a thaw in U.S.–China relations after months of tariff battles and trade tensions, with both sides easing duties and seeking a longer-term framework. For companies and policymakers, this signals a new era where trade, technology, and national security intertwine in complex, sometimes contradictory ways. Watching how this story unfolds will offer clues about the future of global tech commerce—and whether revenue-sharing becomes a norm or a cautionary tale.
Long Story Short
The Nvidia and AMD revenue-sharing deal is more than a financial arrangement—it’s a landmark moment in U.S. trade and technology policy. By agreeing to pay 15% of their China chip sales revenue to the government, these companies are navigating a complex web of legal challenges and geopolitical pressures. While this deal unlocks access to a vital market, it also raises constitutional questions that could reshape export controls. For investors, industry watchers, and policymakers, it’s a vivid reminder that in today’s global economy, business decisions are inseparable from politics and law. As this story unfolds, staying informed and adaptable will be key. The chipmakers’ gamble reflects a new reality where innovation, diplomacy, and legal frameworks collide—offering lessons on how to thrive amid uncertainty and change.