In a move that has sent ripples through the global technology and trade landscape, Nvidia and AMD have agreed to an unprecedented deal with the U.S. government: handing over 15% of their revenue from chip sales in China in exchange for the right to export their latest products to the world’s second-largest economy. The agreement, first reported by the Financial Times on August 11, 2025, marks an extraordinary intersection of business, technology, and geopolitics, and underscores the growing complexity of U.S.-China relations in the semiconductor sector.
According to Financial Times, the deal was cemented in early August, just two days after Nvidia CEO Jensen Huang met with President Donald Trump. On August 8, the U.S. Department of Commerce began issuing export licenses for Nvidia’s H20 chips—products specifically redesigned for the Chinese market after President Joe Biden’s administration imposed sweeping controls on advanced AI chips in late 2023. AMD, which also produces chips targeted at China, received similar export permissions around the same time.
The stakes are enormous. Bernstein Research estimates that Nvidia will sell over $15 billion—some estimates even suggest as much as $23 billion—worth of H20 chips to China in 2025, while AMD is projected to reach $800 million in sales with its MI308 chips. If these forecasts hold, the U.S. government stands to collect nearly $2.4 billion from this revenue-sharing arrangement in a single year. Yet, officials have not disclosed how these funds will be used, leaving open questions about their ultimate destination.
This financial concession is truly without precedent. As Financial Times notes, no U.S. company has ever before agreed to share a portion of its revenue in order to obtain export licenses. Experts specializing in export controls confirmed that this is a first for American industry. While AMD declined to comment on the deal, Nvidia did not deny its existence. Instead, a spokesperson for Nvidia stated, “We comply with the regulations that the U.S. government sets for our participation in global markets.”
The origins of this deal can be traced back to the escalating tensions over U.S. technology exports to China. After President Biden imposed strict export controls in late 2023 to prevent advanced AI chips from reaching China, Nvidia responded by designing the H20 chip specifically to comply with these new rules. In April 2025, the Trump administration went a step further, announcing a ban on exporting the H20 to China. However, after a White House meeting with Jensen Huang in June, Trump reversed course and allowed for the possibility of export licenses—provided the companies were willing to share part of their sales revenue.
Even with the policy reversal, the path to resuming exports was anything but smooth. Nvidia grew increasingly anxious as the Bureau of Industry and Security (BIS), the branch of the Commerce Department responsible for export controls, failed to issue any licenses. During a meeting with President Trump on June 6, 2025, Huang raised the issue directly. Just two days later, the first licenses were granted, opening the door for renewed chip shipments to China.
However, the decision to allow these exports has not gone unchallenged. Critics, including U.S. security experts and some officials within BIS, have voiced concerns that Nvidia’s H20 chips could bolster China’s military capabilities and erode the United States’ edge in artificial intelligence. In a recent letter to Commerce Secretary Howard Lutnick, Matt Pottinger—a former deputy national security adviser—and 19 other security experts urged the administration to deny export licenses for the H20, calling it a “powerful accelerator for China’s advanced AI capabilities” that could ultimately serve the Chinese military.
Nvidia has forcefully rejected these allegations. The company maintains that the claims are unfounded and insists that China cannot use the H20 for military applications. In fact, Nvidia has not shipped H20 chips to China for several months, pending changes in export control regulations. In a statement, the company argued, “America cannot repeat the mistakes made with 5G and lose its lead in telecommunications. The U.S. AI technology ecosystem could become the world standard if it competes at full speed.”
The high-stakes deal has unfolded against a backdrop of broader trade tensions between Washington and Beijing. Semiconductors have emerged as a new flashpoint in the ongoing negotiations, with the existing tariff truce between the two countries set to expire on August 12, 2025. China, for its part, is pushing the U.S. to relax controls on high-bandwidth memory chips—components that are crucial for powering advanced AI applications and generative AI systems. Beijing fears that U.S. restrictions could stifle the development of China’s own AI chip industry, including efforts by domestic giants like Huawei.
Meanwhile, the Trump administration has signaled even tougher measures may be on the horizon. Last week, President Trump announced plans to impose a 100% tariff on imported chips and semiconductors unless manufacturers build factories in the United States. The specifics of this new tariff policy are expected to be unveiled in the coming days, potentially adding more fuel to the already fraught U.S.-China technology rivalry.
Trade talks between the two countries are ongoing, with both sides hoping to pave the way for a potential summit between President Trump and Chinese President Xi Jinping. In a bid to avoid further escalation, the U.S. Department of Commerce has reportedly been instructed to freeze new export control measures, at least temporarily. Still, the fate of high-bandwidth memory chips remains a sticking point, as China continues to press for more access to the technologies that underpin next-generation AI.
The semiconductor saga has also reignited debates about the United States’ long-term position in the global technology race. Some in the industry warn that America risks repeating past mistakes—like losing the 5G race to foreign competitors—if it does not move decisively to protect and expand its leadership in AI and related fields. Others argue that strict export controls are essential to national security and maintaining a technological edge.
For Nvidia and AMD, the revenue-sharing deal with Washington is both a testament to the importance of the Chinese market and a stark reminder of the shifting ground beneath the technology sector. As the world watches, the outcome of this high-stakes experiment could set a precedent for how global tech companies navigate the increasingly turbulent waters of international trade and geopolitics.
With billions of dollars, national security, and technological supremacy on the line, the world’s eyes are fixed on the next moves in this unfolding drama.
