Nvidia and AMD have reportedly struck a groundbreaking deal with the U.S. government, agreeing to hand over 15% of their revenue from specialized chip sales to China. The arrangement—described by analysts as an unprecedented “export tax”—marks a bold departure from traditional trade policy, ending a months-long stalemate and reopening one of the most lucrative technology markets in the world.
According to the Financial Times, the agreement underscores the Trump administration’s willingness to employ highly transactional tactics to both generate federal revenue and regulate the transfer of sensitive technology abroad. The targeted chips, prized for their advanced capabilities in training artificial intelligence systems, have become essential assets in the global AI arms race. By tying market access to direct payments, Washington is signaling that economic leverage over strategic industries will be a central tool in navigating the escalating competition between the United States and China.
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Why They Agreed to Pay
For Nvidia and AMD, conceding 15% of their China-related revenue to the U.S. government was a calculated compromise—painful, but far less damaging than a complete market ban.
Nvidia had borne the brunt of the restrictions. In April, after the administration blocked its China-specific chips, the company was forced to write down $4.5 billion in unsold inventory. The financial strain deepened in May, when Nvidia warned investors that the export curbs could strip as much as $8 billion from its annual revenue.
For AMD, the numbers were smaller but the stakes equally high. China remains a critical growth market, and losing access entirely would have been a strategic and financial blow. In the end, paying a 15% “access fee” was seen as the lesser of two costly outcomes—one that allowed both chipmakers to preserve their foothold in one of the world’s most important technology markets.
How We Got Here
The standoff marks the latest escalation in the U.S.–China technology conflict, a contest increasingly centered on artificial intelligence. Washington’s goal has been to slow Beijing’s military modernization by cutting off access to high-performance AI chips.
After the previous administration banned sales of their most advanced processors, Nvidia and AMD responded with a workaround: specially designed, lower-powered “compliance chips” for China, such as Nvidia’s H2O and AMD’s MI308. But in April, the Trump administration tightened export controls again, requiring special licenses for even these downgraded models.
That decision sparked months of high-stakes lobbying, including multiple White House visits by Nvidia CEO Jensen Huang, culminating in the new revenue-sharing arrangement. For the Trump administration, the deal delivers both symbolism and substance—generating a new federal revenue stream to help fund the president’s “One Big Beautiful Bill” tax cuts while projecting a tough stance on China.
In a statement to Gizmodo, Nvidia declined to confirm the 15% figure but emphasized its compliance with U.S. rules:
“We follow rules the U.S. government sets for our participation in worldwide markets. While we haven’t shipped H2O to China for months, we hope export control rules will let America compete in China and worldwide. America cannot repeat 5G and lose telecommunications leadership. America’s AI tech stack can be the world’s standard if we race.”
The arrangement is a sharp break from traditional trade policy, which typically subsidizes exports to bolster national champions. Here, Washington is effectively charging its most successful tech companies for access to overseas markets. For Nvidia, the compromise offers a path to regain dominance in China and potentially push its market valuation beyond $5 trillion—but it also sets a striking precedent for U.S. control over strategic industries.
Frequently Asked Questions
What is the new deal between Nvidia, AMD, and the U.S. government?
Nvidia and AMD have agreed to pay the U.S. government 15% of their revenue from specialized chip sales to China. In exchange, they regain access to a critical market after months of export restrictions.
Why did the companies agree to this?
Both companies faced severe financial losses from being locked out of China. For Nvidia, the restrictions led to a $4.5 billion inventory write-down and an $8 billion projected revenue hit. The 15% payment was seen as a lesser cost compared to a complete ban.
How does this affect U.S.–China relations?
The deal reinforces U.S. control over strategic technology exports while still allowing limited trade. It signals Washington’s intent to monetize and tightly regulate high-end tech flows to China.
Is this common trade policy?
No. Traditionally, governments subsidize exports to strengthen domestic champions. This move flips the model—charging companies for the right to compete abroad.
Could this model apply to other industries?
Potentially. If deemed successful, the U.S. could apply similar revenue-sharing terms to other strategic sectors, such as semiconductors, aerospace, or clean energy technologies.
What’s next for Nvidia and AMD in China?
Both firms are expected to reintroduce compliant AI chips to the Chinese market under the new rules, aiming to recover lost sales and maintain market share.
Conclusion
The Nvidia–AMD revenue-sharing deal with Washington marks a rare blend of economic pragmatism and geopolitical strategy. By accepting a 15% levy on their China sales, the two chipmakers have secured a lifeline to one of their most important markets while the U.S. government cements its leverage over critical technologies.
For the Trump administration, it is both a political and fiscal win—projecting toughness on China, protecting national security interests, and generating funds to support domestic policy priorities.
