In a move that underscores growing tensions between the US and China over advanced technology exports, semiconductor giants Nvidia and AMD have agreed to pay 15% of their China chip sales revenue directly to the US government. The agreement marks a rare and highly unusual arrangement in the global tech sector, reflecting Washington’s tightening grip on strategic technology exports.
According to industry insiders, the deal was reached as part of ongoing negotiations to secure export licenses for high-performance AI and GPU chips destined for Chinese customers. The US government has been increasingly wary of China’s rapid advancements in artificial intelligence, quantum computing, and military applications, prompting new export controls aimed at limiting access to cutting-edge semiconductors.
A Strategic Concession to Keep Business Alive
For both Nvidia and AMD, China represents one of their most significant overseas markets, accounting for billions in annual sales. Completely losing access to this market could have major repercussions on their bottom lines. By agreeing to this 15% revenue payment to the US, the companies effectively gain continued access to Chinese buyers while aligning with Washington’s national security objectives.
Industry analysts say the move is a “calculated compromise” — one that allows Nvidia and AMD to maintain competitive positioning in Asia without openly defying US export policies. “It’s a delicate balancing act,” noted Mark Jensen, a semiconductor market strategist. “The US government is sending a message to both domestic companies and foreign competitors: access to certain markets now comes with a cost.”
Impact on the Global Semiconductor Industry
This new policy could set a precedent for future technology exports. Other chipmakers in the US and allied countries may face similar revenue-sharing arrangements if they wish to sell advanced components to China or other geopolitically sensitive regions.
For Nvidia, whose AI chips are currently in massive demand due to the generative AI boom, the deal means they can still supply China with certain products while retaining compliance with US law. AMD, meanwhile, is eyeing growth in data center and gaming chip markets, and avoiding a complete loss of Chinese customers is seen as a major win.
However, the agreement may also accelerate China’s domestic semiconductor ambitions. Beijing has been heavily investing in homegrown chip design and manufacturing, and restrictions like these could further fuel the push for technological self-sufficiency.
US Policy Driving New Industry Norms
The US has been steadily tightening export controls since 2022, aiming to restrict China’s access to high-end chips used in AI model training, supercomputing, and advanced weapons systems. This latest agreement with Nvidia and AMD represents an evolution in enforcement — not just banning or licensing exports, but actively generating government revenue from them.
While the companies have not publicly disclosed their full financial projections under this arrangement, industry observers estimate that the payments could amount to hundreds of millions annually if China’s demand remains strong. The funds collected by the US government are expected to be funneled into domestic semiconductor initiatives, research grants, and supply chain security programs.
Market Reactions and Investor Outlook
Following the announcement, both Nvidia and AMD shares experienced slight volatility in early trading. Investors are weighing the long-term benefits of retaining access to China against the near-term revenue reduction from the 15% payment.
“From an investor perspective, losing the Chinese market would have been far worse,” said Jensen. “While the payment cuts into margins, it’s a relatively small price to pay to maintain market presence and stay in compliance with US rules.”
As the semiconductor landscape continues to evolve under geopolitical pressures, analysts believe more US companies could face similar deals — especially in industries where technology intersects with national security.
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