Nvidia and AMD Agree to Pay 15% of China Chip Sales to US Amid Trade Tensions
Published 10 August 2025
Highlights
- Nvidia and AMD will pay the US government 15% of their semiconductor sales revenue from China to secure export licenses.
- This unprecedented agreement is part of easing trade tensions between the US and China, with both countries relaxing certain trade restrictions.
- The arrangement highlights the high cost of accessing the Chinese market amid ongoing US-China trade tensions.
- Nvidia's H20 and AMD's MI308 chips are central to this deal, with the US previously banning their sale to China over security concerns.
- The agreement comes as Nvidia faces scrutiny from Chinese authorities over potential security risks in its chips.
In a groundbreaking move, semiconductor giants Nvidia and AMD have agreed to remit 15% of their China-based chip sales revenue to the US government. This arrangement, first reported by the Financial Times, is part of a deal to secure export licenses for their semiconductors, crucial for accessing the lucrative Chinese market.
Unprecedented Agreement Amid Trade Tensions
The agreement, described as "unprecedented" by Charlie Dai, a vice president at Forrester, underscores the financial and strategic challenges faced by tech companies amid escalating US-China trade tensions. The US had previously imposed a ban on Nvidia's H20 chips due to national security concerns, a decision that was reversed in July, allowing the company to resume sales in China. AMD's MI308 chips are also included in this revenue-sharing deal.
Navigating Security Concerns and Market Access
Nvidia's CEO, Jensen Huang, has been actively lobbying for the resumption of chip sales to China, meeting with US President Donald Trump to discuss the matter. Despite the easing of some trade restrictions, Nvidia continues to face scrutiny from Chinese authorities over potential security risks associated with its chips. Chinese state media has raised concerns about possible "backdoor" security vulnerabilities, which Nvidia has denied.
Broader Implications for US-China Relations
This agreement is part of broader efforts to ease trade tensions between the world's two largest economies. Recent developments include Beijing relaxing controls on rare earth exports and the US lifting restrictions on chip design software firms operating in China. However, the future of US-China trade relations remains uncertain, with ongoing negotiations and a looming deadline for extending a tariffs truce.
What this might mean
The agreement between Nvidia, AMD, and the US government could set a precedent for other tech companies seeking access to the Chinese market. As trade tensions continue to evolve, the semiconductor industry may face increased pressure to navigate complex geopolitical landscapes. Experts suggest that while this deal may temporarily ease tensions, long-term solutions will require more comprehensive trade agreements addressing both economic and security concerns. The outcome of these negotiations could significantly impact global tech supply chains and the future of AI technology development.
