Under the new, atypical accord, the U.S. stands to secure a 15% commission from sales of Nvidia and AMD chips to China.

Under the new, atypical accord, the U.S. stands to secure a 15% commission from sales of Nvidia and AMD chips to China.

The tech giants Nvidia and AMD have reached an agreement with the U.S. government to share 15% of their revenues from sales of advanced AI chips to China. This arrangement applies to chips such as Nvidia’s H20 and AMD’s MI308, with the Department of Commerce recently issuing the necessary licenses after a temporary ban earlier in 2025.

The background for this agreement includes the U.S. government's export controls on advanced technology to China, motivated by national security concerns. A temporary halt on sales of Nvidia’s H20 chips to China in April 2025 and a policy shift allowing limited chip sales under stringent conditions to maintain U.S. economic competitiveness globally while addressing security concerns also played a role.

The implications of this revenue-sharing deal are significant. The U.S. government gains a financial stake (15% of revenue) from privately made chip sales to China, ostensibly compensating for potential security risks. However, this arrangement has sparked criticism from security experts who view it as compromising national security protections for government revenue.

Concerns have been raised about the coherence of the policy. If selling advanced chips to China is deemed a national security risk, allowing it with a revenue penalty may weaken deterrence. On the other hand, if not a risk, the penalty seems unnecessary.

This agreement reflects a complex balancing act between economic interests, global tech competition, and national security priorities in U.S.-China relations regarding sensitive semiconductor technology.

Notably, the emergence of China's DeepSeek AI chatbot in January has renewed concerns over how China might use advanced chips to help develop its own AI capabilities. Derek Scissors, senior fellow and China expert at the conservative American Enterprise Institute, has questioned the constitutionality of the deal and warned against risking national security for revenue.

Rep. Raja Krishnamoorthi, the ranking member of the House Select Committee on China, has stated he will seek answers about the legal basis for the agreement and demand full transparency from the administration. Nvidia, however, has not commented on the specific details of the agreement or its quid pro quo nature.

AMD did not immediately reply to a request for comment. Nvidia, on the other hand, has argued that tight export controls around their chip sales could cost the company an extra $5.5 billion. They have also warned that U.S. export controls could end up pushing other countries toward China's AI technology.

Commerce Secretary Howard Lutnick has mentioned that the renewed sale of Nvidia’s chips in China was linked to a trade agreement made between the two countries on rare earth magnets. Scissors believes there's no precedent for this deal due to the unconstitutional nature of export taxes, and he doubts its durability.

In summary, the revenue-sharing deal between Nvidia, AMD, and the U.S. government for chip sales to China is a significant development in the ongoing tensions between the two superpowers. The deal represents a delicate balance between economic interests, global competition, and national security considerations, and its implications will be closely watched by both tech companies and policymakers.

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