Nvidia and Advanced Micro Devices (AMD) have agreed to pay the US government a 15% revenue share on sales of certain AI chips to China. This unusual arrangement allows the companies to secure export licenses for their chips, specifically Nvidia's H20 and AMD's MI308 accelerators, which were designed to comply with US export restrictions.
The deal enables the companies to obtain export licenses, which were previously restricted due to national security concerns. Nvidia generated $17 billion from China in its fiscal year ending January 26, 2025, while AMD reported $6.2 billion in China revenue for 2024. The arrangement could earn the US government over $2 billion.
China has expressed concerns over the security risks of Nvidia's H20 chips and may accelerate its domestic chip development to reduce dependence on US technology. The revenue-sharing agreement may lead to higher prices for American chips in China, potentially making them less competitive against domestic alternatives.
This deal sets a new precedent for export controls, raising questions about its implications for other industries and technology sectors. The move highlights the complex dynamics between the US and China in the tech industry, where national security concerns and trade restrictions are increasingly shaping business decisions.
