The world of technology and geopolitics collided in dramatic fashion this week as the Trump administration unveiled a groundbreaking—and controversial—deal with two of America’s top chipmakers. Nvidia and Advanced Micro Devices (AMD) have agreed to pay the U.S. government 15% of their revenue from sales of artificial intelligence (AI) chips to China, a move that’s sending shockwaves through Silicon Valley, Wall Street, and Washington alike.
According to AP, the agreement was struck to secure critical export licenses for Nvidia’s H20 and AMD’s MI308 chips, both of which are used to power AI development. The deal comes on the heels of a tumultuous period in U.S.-China tech relations. Back in April 2025, the Trump administration abruptly halted the sale of advanced computer chips to China, citing national security concerns. The concern? That these powerful chips could help China accelerate its own AI capabilities, potentially threatening the U.S.’s technological edge.
But the landscape shifted again in July, when Nvidia and AMD announced that Washington would permit the resumption of sales—albeit with new strings attached. President Trump, at a Monday press conference on August 11, 2025, confirmed the unusual terms: “We negotiated a little deal. So he’s selling a essentially old chip,” Trump said, referencing Nvidia CEO Jensen Huang. Trump revealed that he initially pushed for a 20% share of the sales revenue, but Huang successfully bargained him down to 15%.
“And I said if I’m going to do that, I want you to pay us as a country something, because I’m giving you a release,” Trump explained, according to NPR. He described the H20 chip as “obsolete” and “an old chip that China already has… in a different form, different name.” The H20, it turns out, was specifically designed to be less powerful than Nvidia’s top-of-the-line offerings, in order to comply with U.S. export restrictions.
While Nvidia declined to comment on the precise details of the revenue-sharing arrangement, the company was clear about its compliance. “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,” Nvidia said in a statement to AP.
The deal is unprecedented in the annals of U.S. export control policy. As The New York Times reported, there are few precedents for the Commerce Department granting export licenses in exchange for a share of corporate revenue. Some observers, such as Derek Scissors of the American Enterprise Institute, questioned the constitutionality of the move. “There’s no precedent for this, probably because export taxes are unconstitutional,” Scissors said. “They call it a fee, but 15% of sales revenue is about as standard a tax as it comes.”
Indeed, the U.S. Constitution states: “No Tax or Duty shall be laid on Articles exported from any State.” That’s led to a flurry of legal and political questions. Representative John Moolenaar, the Republican chair of the House Select Committee on China, expressed concern over the deal, saying, “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.”
Representative Raja Krishnamoorthi, the committee’s top Democrat, was even more blunt: “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.”
Yet for Nvidia and AMD, the stakes are enormous. Nvidia estimated in July that strict export controls would cost the company an extra $5.5 billion, underscoring the importance of access to China, the world’s largest semiconductor market. According to Bernstein Research, Nvidia is expected to sell over $15 billion worth of its H20 chips to China by the end of 2025, while AMD is projected to sell $800 million worth of its MI308 chip. The 15% levy could funnel more than $2 billion to the U.S. government.
Still, the agreement has sparked fears among national security experts and former officials. Liza Tobin, a former China director at the National Security Council, warned, “This is an own goal and will incentivize the Chinese to up their game and pressure the administration for more concessions. You’re selling our national security for corporate profits.” In July, a bipartisan group of former officials sent a letter to the administration calling the policy change “a strategic misstep that endangers the United States’ economic and military edge in artificial intelligence,” arguing that the H20 is “a potent accelerator of China’s frontier AI capabilities, not an outdated chip.”
On the other side of the Pacific, the deal hasn’t gone unnoticed. In July, Chinese regulators summoned Nvidia representatives to discuss concerns about possible “backdoors” or security risks in the H20 chip. Nvidia responded in a blog post, “There is no such thing as a ‘good’ secret backdoor—only dangerous vulnerabilities that need to be eliminated.” The company also condemned a proposed U.S. congressional law, the Chip Security Act, which would require tracking of chips to prevent smuggling to China.
Meanwhile, the Trump administration has continued its interventionist approach to international business. Just last week, President Trump announced a 100% tariff on semiconductors made abroad unless companies invest in the United States. The administration also recently approved a Japanese investment in U.S. Steel, with the government taking a so-called “golden share”—a rarely used practice that gives the government a stake in the business.
For their part, Nvidia and AMD’s stock prices reflected the market’s uncertainty. On August 11, 2025, Nvidia dipped 0.35% and AMD 0.3%, after both stocks swung up and down during the trading session, reported Investor’s Business Daily. Taiwan Semiconductor, the company that manufactures the chips, saw a modest gain. Nvidia shares had hit a record high the previous week, with AMD pausing near a 52-week peak.
Commerce Secretary Howard Lutnick, in a July appearance on CNBC, linked the renewed sale of Nvidia’s chips in China to a broader trade agreement on rare earth magnets—another sign of the complex economic chess game between the U.S. and China.
As the dust settles, the debate rages on: Is this a savvy way for the U.S. to maintain a technological edge and generate revenue, or a dangerous precedent that sacrifices national security for short-term gain? For now, the world watches as America’s AI giants navigate the shifting sands of global politics and commerce, with billions of dollars—and the future of technology—hanging in the balance.
