Nvidia (NASDAQ:) and AMD (NASDAQ:) have reached an unprecedented agreement with the U.S. government, under which they will remit 15% of revenues from Chinese sales of their advanced AI chips in exchange for export licenses.
The deal covers, among others, Nvidia’s H20 and AMD’s MI308 models, which until now were subject to restrictions stemming from U.S. export control regulations. This mechanism forms part of President Donald Trump’s strategy to secure tangible financial benefits in exchange for trade concessions. Experts emphasize that introducing a selective “export tax” of this kind is without precedent in the history of U.S. trade policy.
From a national security perspective, however, significant doubts have emerged. The agreement could weaken U.S. arguments supporting export restrictions and complicate cooperation with allies to control the flow of advanced technologies. In China, the deal has not been met with enthusiasm. Beijing has shown limited interest in importing the H20 model, while state media have criticized U.S. chips, accusing them of low performance and alleged security vulnerabilities.
The potential financial impact is considerable. Before the restrictions, Nvidia’s sales in China could exceed USD 7 billion in a single quarter, which under the new mechanism would translate into roughly USD 1 billion in quarterly revenue for the U.S. budget. For AMD, the easing of restrictions could result in revenues of USD 3–5 billion in 2025.
Meanwhile, Chinese manufacturers such as Huawei, with its Ascend series, are steadily increasing market share, already meeting 20–30% of domestic demand for advanced AI processors.
The agreement appears to have a dual nature. While the mechanism represents an important bargaining chip for the U.S. in negotiations with China, it may also constrain Nvidia’s and AMD’s expansion in the world’s largest chip-importing market. It is worth noting that the United States needs additional tax revenue; however, Chinese accusations of “backdoors” in U.S. chips may be part of a broader political pressure strategy.
As a result, while the agreement is potentially highly lucrative for the U.S. budget, it carries serious geopolitical risks and uncertainty over its long-term consequences for the position of American technology companies in China.