Nvidia, AMD To Hand Over 15% Of China AI Chip Revenue To US Government

Nvidia Corp. and Advanced Micro Devices Inc. will hand over 15 percent of revenue from their artificial intelligence chip sales to China to the U.S. government as a condition for receiving export licenses.

The deal, confirmed by administration officials, covers Nvidia's H20 chip and AMD's MI308 processor, both previously barred under tightened export controls. It comes ahead of a regulatory deadline that would have further restricted U.S. technology sales to China, as reported by The Washington Post.

Licenses are now being issued under the new terms, reversing an April halt on shipments. Analysts at Bernstein estimate the 15 percent levy could trim chip gross margins by five to 15 percentage points, a hit large enough to affect broader corporate profitability, according to Reuters.

The financial markets reacted with caution Monday morning. Nvidia shares were down roughly 1 percent, while AMD slipped about 2 percent in early trading, as reported by Investor's Business Daily.

Legal experts warn the policy could test constitutional limits, citing the U.S. ban on export taxes and the principle that export controls should be based on national security rather than revenue collection. Critics say the agreement may set a precedent for using trade restrictions as a fiscal tool.

In a statement, Nvidia said it complies with U.S. government rules "for our participation in worldwide markets" and expressed hope that future policies will enable the U.S. to "compete in China and worldwide." AMD has declined public comment. Beijing has not yet issued an official response.