In a surprising twist in the ongoing US-China tech trade war, major American chipmakers Nvidia and AMD have struck a deal with the US government.
They will pay 15% of their revenues from selling advanced AI chips to China directly to the US Treasury. This unusual arrangement allows them to obtain export licenses for restricted semiconductors, resuming sales in one of their largest markets.
The agreement focuses on high-end AI chips like Nvidia’s H20—a downgraded version compliant with US export controls—and AMD’s MI308 equivalents. These chips are vital for data centers and AI training but have been curtailed due to fears of military applications in China.
According to sources, this revenue-sharing model acts as a fee or royalty, enabling the companies to navigate strict export bans imposed since 2022. For Nvidia, China previously accounted for 20-25% of its data center revenue before restrictions hit. The deal could stabilize sales but adds a financial hit—potentially billions annually if sales rebound.
US officials, under the Trump administration’s influence, negotiated this to balance national security with economic interests. “It’s a creative way to enforce controls while not fully shutting out American firms,” a Commerce Department spokesperson noted. This move marks a novel approach in trade policy, blending tariffs with direct revenue cuts.
Market reactions were swift: Nvidia shares dipped 2-3% in premarket trading on August 11, reflecting investor concerns over profit margins. AMD followed suit, amid broader semiconductor sector jitters. Analysts predict this could set a precedent for other tech exports.
China’s response remains muted, but experts warn of potential retaliation, like boosting domestic chipmakers Huawei or SMIC. This deal underscores escalating US efforts to curb China’s AI ambitions, amid global supply chain shifts.
