Nvidia agrees to allocate 15% of AI chip revenue towards China sales
Nvidia and AMD Strike Revenue-Sharing Deals with US Government to Sell Chips to China
In a significant development, Nvidia and Advanced Micro Devices (AMD) have reached agreements with the US government to sell certain chip models to China, under the condition that they share a portion of the revenue with the US government.
Last month, Nvidia became the first company ever to reach a market value of US$4 trillion, and the agreement allows Nvidia to sell its AI chip called the H20 to China under an export license. In exchange, Nvidia will pay the U.S. Commerce Department 15% of the revenue from those sales. This deal was reached following a meeting between Nvidia CEO Jensen Huang and President Trump around August 6, 2025.
Similarly, AMD agreed to a comparable deal for its MI308 chip, also subject to a 15% revenue share to the U.S. government. The revenue collected from these sales is intended to help pay down the national debt, with the possibility of expanding the revenue-sharing model to other industries in the future, as explained by Treasury Secretary Scott Bessent.
The US government had not issued licenses for Nvidia to sell chips before the reported White House meeting. Previously, Nvidia was not able to immediately verify the reports, but the move is now clear as part of the Trump administration's efforts to impose stiff tariffs, with goals including addressing US trade imbalances, reshoring manufacturing, and pressuring foreign governments to change policies.
The key details of the Nvidia agreement are:
- Chips involved: Nvidia’s AI accelerator chip H20.
- Revenue share: 15% of the revenue from China sales goes to the U.S. government.
- Purpose: In exchange for export licenses allowing Nvidia to sell to China while maintaining U.S. leverage in trade negotiations.
- Negotiation: Deal struck after Nvidia CEO met President Trump; initial 20% cut negotiated down to 15%.
- Context: Part of evolving US export controls shifting from outright bans to leverage through revenue sharing.
Nvidia has not shipped the H20 to China in recent months but hopes export control rules will continue to allow US competition in the Chinese market. The deal between the US government and AMD could earn over US$2 billion. Previously, AMD was barred from exporting the MI308 chips to China.
It's worth noting that Nvidia is the world's leading semiconductor producer, and the agreement marks an unusual arrangement in international tech trade, as Nvidia agreed to give the federal government a portion of its revenues. The move has attracted attention from major news outlets such as the Financial Times, Bloomberg, and New York Times.
The US has been restricting Nvidia's chip exports to China on national security grounds, and the 100% tariff on many semiconductor imports came into effect last week, with exceptions for tech companies that announce major investments in the US. The agreement between Nvidia and the US government aims to find a balance between maintaining national security and allowing controlled exports while capturing value for the US government.
- The recent deal between Nvidia and the US government to sell its AI chip, the H20, to China under an export license includes a 15% revenue share with the U.S. government.
- The Malaysian government might consider following a similar model with its domestic technology industry to generate additional revenue and support the economy, given the success of the US government's revenue-sharing deal with Nvidia.
- In view of the growing importance of the technology industry in finance and economic growth, it is crucial for the government to strike the right balance between national security and supporting controlled exports that can bring financial benefits, as demonstrated by the Nvidia and US government agreement.
