Nvidia and AMD Agree to Pay U.S. 15% of China Chip-Sale Revenue

Nvidia and AMD have reached an unprecedented agreement with Washington: in exchange for export licenses to sell certain AI chips in China, each company will remit 15% of related revenues to the U.S. government. The deal reopens a critical market segment previously restricted under export controls.

Strategic Revenue Tradeoff

The agreement restores access to two key products—Nvidia’s H20 and AMD’s MI308—both popular in China’s expanding AI sector but barred under earlier rules. Sales of these chips had been severely curtailed, with China historically accounting for a significant share of both companies’ revenues.

By accepting the 15% levy, the chipmakers can recapture a substantial portion of lost sales, potentially adding billions in annual revenue for Nvidia and hundreds of millions for AMD. The trade-off lies in giving up a slice of profit to secure regulatory clearance and market stability.

National Security Versus Commercial Gains

U.S. officials maintain that the chips in question do not represent the most sensitive technology, framing the arrangement as a balance between safeguarding national interests and supporting American industry abroad. Still, the policy has raised concerns about precedent, with critics warning it could blur the line between export control enforcement and revenue-driven licensing.

Market Reaction and Outlook

Equity markets responded with measured optimism. Shares in Nvidia and AMD saw early gains before paring back as investors weighed the earnings boost against the cost of the revenue share. Broader semiconductor peers also drew interest, with expectations that similar arrangements could emerge in future trade negotiations.

If demand projections hold, the U.S. Treasury stands to collect significant recurring revenue, while both companies could strengthen their foothold in one of the world’s largest technology markets. The longer-term risk lies in whether geopolitical shifts might unwind or tighten the current framework.

Tips for Traders

• Track company earnings: Monitor quarterly reports for the net impact of the 15% levy on profitability.

• Watch export-control trends: Future policy changes could reshape global semiconductor flows.

• Position across related sectors: AI demand, materials supply, and defense tech remain interconnected.

• Trade volatility strategically: Use policy-driven price swings for tactical entry and exit points.

• Monitor U.S.–China relations: Diplomatic developments could accelerate or derail the deal.

• Evaluate ETF exposure: Semiconductor-focused funds may offer diversified access to policy-sensitive gains.