Washington: In a landmark move blending trade policy and national security concerns, U.S. chipmakers Nvidia and AMD have agreed to pay 15% of their revenue from AI chip sales in China to the U.S. government. The arrangement is a condition for receiving export licenses to ship specific AI processors to the Chinese market, which had been restricted under earlier export control measures.

The agreement applies to Nvidia’s H20 AI accelerator and AMD’s MI308 chip, both of which are used extensively in artificial intelligence workloads. These chips were previously barred from export due to concerns about advancing China’s AI capabilities. The Trump administration reversed part of the ban after negotiations involving company executives and U.S. officials, granting licenses in exchange for the revenue-sharing commitment.

China remains a major market for both companies. In 2024, Nvidia generated about \$17 billion from China, representing roughly 13% of its total sales, while AMD earned \$6.2 billion, about 24% of its revenue. Analysts estimate Nvidia’s sales of the H20 chip in China could reach \$23 billion in 2025, meaning the U.S. Treasury could collect billions annually under the new arrangement.

While the deal opens the door for U.S. companies to resume sales in a lucrative market, it has drawn criticism. Legal experts warn it could violate the U.S. Constitution’s prohibition on export taxes, while policy analysts question whether such a model undermines the security rationale behind export restrictions. Critics argue that if the chips are a national security risk, they should not be sold at all.

Diplomatic tensions also remain high. Chinese state media has accused the H20 chip of having a built-in “backdoor” for remote shutdown—claims that Nvidia strongly denies. The deal may also set a precedent for other nations to demand similar payments from U.S. companies in exchange for market access, potentially complicating future trade and technology policy.

This unprecedented arrangement highlights the U.S. government’s attempt to balance economic benefits with geopolitical strategy, ensuring Chinese access to American technology remains limited but financially advantageous for Washington.