After months of lost sales, the US gives Nvidia and AMD the green light tosell AI chips to China… in exchange for a healthy cut of the revenue.
From “You’re Banned” to “We’ll Take a Cut”
For months, Nvidia and AMD watched one of the world’s biggest artificial intelligence (AI) markets slip through their fingers. The US government’s ban on selling certainhigh-performance chips to China didn’t just sting — it torched billions inpotential revenue. Nvidia’s H20 and AMD’s MI308, chips designed specifically tothread the needle of Biden-era export rules, were dead in the water after anApril prohibition from the Trump administration.
Nvidia and Advanced Micro Devices Inc. agreed to pay 15% of their revenues from chip sales to China to the US government as part of a deal with the Trump administration to secure export licenses, the Financial Times reported Sunday https://t.co/5Mfdjm5OHr
— Bloomberg (@business) August 10, 2025
Nvidia had reason to sweat. Bernstein analysts reckoned that before thecontrols, Nvidiacould have shifted around 1.5 million H20 chips to China in 2025, worth roughly$23 billion. AMD, while a smaller player in the AI chip feeding frenzy, wasfacing a similarly bruising loss of access to the world’s second-largesteconomy.
But in Washington, nothing is permanent except political convenience —and perhaps tariffs.
The 15% Cover Charge
Last week, the Bureau of Industry and Security began issuing thelong-awaited export licenses. The catch? Nvidia and AMD must handover 15% of their China chip revenues directly to the US government. ForNvidia, that’s 15% of H20 sales. For AMD, 15% of MI308 sales. Both companieshave confirmed the arrangement in broad strokes, though AMD has kept its publiccomments to a minimum.
Yes, you read that right, 15% of the revenue.
A US official described the deal as “unprecedented” — no Americancompany has ever been asked to part with a slice of its revenues in exchangefor an export license. A 15% levy doesn’t exactly erase any national securityrisks, raising the awkward question: if the chips were such a threat in April,why is selling them now okay as long as Washington gets paid?
“You either have a national security problem or you don’t,” DeborahElms of the Hinrich Foundation told the BBC. “If you have a 15% payment, itdoesn’t somehow eliminate the national security issue.”
How We Got Here
The H20 was born out of compromise. When the Biden administrationslapped strict AI chip export controls on China in 2023, Nvidia engineered aversion that sat just under the limits, allowing it to keep a foot in themarket. Trump’s April ban on the chip closed that loophole — until CEOJensen Huang personally lobbied the president.
Most people don’t realize how massive this announcement truly is.This covers 15% of REVENUE from China, not PROFIT, for both Nvidia and AMD.It also means the Trump Administration is now negotiating company-by-company “trade deals.”The trade war just entered a new era. https://t.co/cHn6tiCkq0
— The Kobeissi Letter (@KobeissiLetter) August 10, 2025
Within days of their White House meeting, licenses began flowing.Officially, the reversal comes as part of broader US-China trade talks, whichhave included Beijing loosening rare earth export controls and Washingtoneasing restrictions on chip design software firms. Bothsides appear to be having a breather, with no clear outcome at this point. Unofficially,it fits a pattern: Trump’s administration has a habit of striking deals wherecompanies pay, build, or invest their way back into favor. The Art of the Deal,anyone?
Beijing’s Not Exactly Cheering
While Wall Street is likely to welcome the return of Chinese sales, thechips themselves are under new scrutiny from the buyer’s side. Chineseregulators have hauled Nvidiain for questioning about alleged “backdoor” vulnerabilities, includingclaims the hardware could enable remote shutdowns. Of course, Nvidiadenies this.
For now, there’s no sign Beijing will block the imports outright —especially given its own need for cutting-edge AI hardware — but the politicaland security baggage isn’t going away.
A Price Worth Paying?
From Nvidia’s perspective, 15% is steep but survivable, especially whenthe alternative is zero China sales. The company’s statement to the BBC waspragmatic: “We follow rules the US government sets for our participation inworldwide markets […] America cannot repeat 5G and lose telecommunicationleadership.” Translation: it’s better to pay the toll, but the US needs to becareful.
BREAKING: Trump’s plan to take a 15% cut of Nvidia and AMD chip sales to China isn’t a tariff, it’s a shakedown. The government is inserting itself as a middleman in international trade, hitting businesses and consumers with what could be the biggest tax hike in U.S. history. pic.twitter.com/JIxQqYCH60
— James Blunt (@JBlunt1018) August 11, 2025
For AMD, the deal could mean a valuable foothold in a market where ittrails Nvidia badly in AI hardware. But the precedent is startling — not justfor chipmakers, but for any US tech firm caught in the geopolitical crossfire.
Charlie Dai of tech and business research firm, Forrester, summed itup: “The arrangement underscores the high cost of market access amid escalatingtech trade tensions, creating substantial financial pressure and strategicuncertainty for tech vendors.”
The Bigger Game
The 15% deal is a microcosm of the current US-China relationship: anuneasy mix of rivalry, mutual dependence, and transactional fixes. As of now,both sides are still negotiating over tariffs and tech access, with a 90-daytruce in place but no long-term agreement in sight.
If this experiment works, Washington may have found itself a new policylever: turning export controls into revenue streams. But as former NationalSecurity Council China expert Liza Tobin quipped, “What’s next — letting LockheedMartin sell F-35s to China for a 15 per cent commission?”
For Nvidia and AMD, the calculation is simple. They’ve been let backinto one of the most lucrative markets on the planet. The price is high, thepolitics are messy, but the alternative was watching competitors fill the gap.In the end, sometimes you pay the toll and keep driving.
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This article was written by Louis Parks at www.financemagnates.com.
