US chip companies pay for access to Chinese market
The Trump administration is using this agreement to gain both financial and political advantage from trade with China.
Published on August 11, 2025
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According to leading media outlets, major US chip manufacturers such as Nvidia and AMD have agreed to hand over 15% of their revenue from sales of advanced AI chips in China to the US government. This is part of a deal to obtain export licenses, now that the US has restricted the export of these chips to China. The Trump administration is using this agreement to gain both financial and political advantage from trade with China.
Nvidia and AMD, two of the largest US chip manufacturers, have agreed to an unusual arrangement whereby 15% of their revenue from sales of AI chips in China will be paid to the US government. This agreement is a condition for obtaining export licenses under President Trump's trade policy. It concerns the sale of Nvidia's H20 chips and AMD's MI308 chips. Nvidia's H20 chips, developed specifically for the Chinese market, were banned by the Trump administration in April. Jensen Huang, Nvidia's CEO, reportedly lobbied for months to have the ban lifted. Last week, Huang and Trump met to negotiate a deal. The US government is concerned that China could use the chips to gain a technological and military advantage.
Financial implications
According to Bernstein Research, the deal could generate more than $2 billion for the US Treasury this year. Nvidia would sell more than $15 billion worth of H20 chips in China, and AMD around $800 million. China is an important market for both Nvidia and AMD. Nvidia generated $17 billion in revenue in China in the fiscal year ending January 26, which was 13% of its total revenue. AMD reported Chinese revenue of $6.2 billion for 2024, representing 24% of its total revenue. The Financial Times reports that the chipmakers agreed to the arrangement as a condition for obtaining export licenses for their semiconductors, including AMD's MI308 chips.
Criticism and concerns
A former advisor to the Department of Commerce suggested that the government is trading national security for revenue for the Treasury. There are concerns about the precedent set by this agreement. Never before has such an agreement been made for an export license in the US. According to the Financial Times, the agreement is in line with President Trump's desire to create more tax revenue and jobs at home at the expense of other countries. Concerns have also been raised about the possible political motives behind the deal.
