Nvidia & AMD to Share 15% AI Chip Revenue from China with U.S. Government

Nvidia and AMD, two major U.S.-based chipmakers, have agreed to give 15 of the profit generated from dealing AI chips to China to the U.S. government. This is a largely unusual arrangement, as U.S. import controls are generally grounded on public security enterprises — not on whether they can induce profit for Washington.

Under this fiscal agreement, both companies will partake a portion of their deals profiting from the U.S. government as a condition for carrying import licenses to vend in China. According to three people familiar with the matter who spoke on condition of obscurity since they weren’t authorized to bandy it intimately — this setup is part of a precondition for doing business in China.

Following the original report of this arrangement by the Financial Times on Sunday, Nvidia issued a statement:

“We misbehave with the rules set by the U.S. government for sharing in global requests. While we have not packed the H20 to China for months, we hope import control regulations will allow the U.S. to remain competitive with China and encyclopedically,” an Nvidia prophet said, pertaining to the company’s important-awaited H20 AI chips.

“America can not go to lose its lead in telecom like it did with 5G. Still, the U. If we compete. AI technology structure could come the global standard,” the statement added.

Back in April, the Trump administration had blocked the trade of H20 chips to China, citing security pitfalls. Still, just before the coming round of trade addresses with Beijing in July, this decision was reversed. H20 was Nvidia’s last AI chip allowed for trade in China after the Biden administration had assessed a broader ban on similar exports since 2022.

Indeed without the profit- participating clause, Trump’s decision to relax chip-trade restrictions for Nvidia sparked contestation. Officers from both parties expressed concern that this inconsistent policy could erode global confidence in U.S. import controls.

Legal scholars have also blamed the rearmost agreement, advising that it could be unconstitutional. Peter Harrell, former Senior Director for International Economics at the White House under the Biden administration, posted on social media:

“Beyond the policy issue of collecting 15 profit from Nvidia and AMD for dealing advanced chips to China, the U.S. Constitution explicitly prohibits levies on exports.”

Christopher Padilla, a former top import control functionary under President George W. Bush and now an elderly counsel at Brunswick Group consulting establishment, echoed those enterprises. He called the deal” unknown and dangerous,” saying

“Import controls are meant to cover public security — not to raise profit for the government. This arrangement looks more like bribery or blackmail — or both. ” Traditionally, the U.S. government has maintained that its import controls are predicated on public security precedences, not profitable motives.

Nvidia CEO Jensen Huang met with Donald Trump at the White House last Wednesday during a prompting visit. Trump, who has intimately praised Huang as an” inconceivable” superintendent, has met with him several times this time.

According to a person familiar with the matter — again speaking anonymously due to the receptivity of the issue — after this recent meeting where the 15 deal was perfected, Trump called Commerce Secretary Howard Lutnick and instructed him to issue the necessary import licenses.

AMD and the White House didn’t immediately respond to requests for comment. Nvidia, now the world’s most precious intimately traded company, has set up itself at the center of the U.S. – China tech contest, as both countries calculate heavily on its AI chips to power their supercomputers.