Chipmaking giants Nvidia and AMD have struck an unprecedented agreement with the US government, committing to pay 15% of their China revenue from specific chip sales in exchange for securing export licences to the world’s second-largest economy.
The deal, first reported by the Financial Times, will see Nvidia pay the levy on its H20 chips, while AMD will do the same for its MI308 chips. Both products are designed for artificial intelligence applications and have been at the centre of US-China tech trade tensions.
“This arrangement underscores the high cost of market access amid escalating tech trade tensions, creating substantial financial pressure and strategic uncertainty for tech vendors,” said Charlie Dai, vice president at research firm Forrester.
Nvidia told the BBC that it complies with US government rules in global markets and expressed hope that export controls would still allow the US to compete internationally. “America cannot repeat 5G and lose telecommunication leadership. America’s AI tech stack can be the world’s standard if we race,” the company stated. AMD has not yet commented.
The H20 chip was specifically developed for the Chinese market after the Biden administration imposed export restrictions in 2023. Sales were later banned by the Trump administration in April this year, citing national security concerns. However, the recent easing of trade tensions between Washington and Beijing has paved the way for sales to resume.
Critics remain sceptical of the arrangement. “If you have a national security problem, a 15% payment doesn’t somehow eliminate the issue,” noted Deborah Elms, head of trade policy at the Hinrich Foundation.
The deal comes amid broader signs of US-China trade thawing. Beijing has eased restrictions on rare earth exports, while Washington has lifted limits on chip design software. Both nations recently agreed to a 90-day tariff truce, though its extension remains uncertain ahead of a 12 August deadline.
Meanwhile, the US government continues to push for domestic tech investment. Apple has pledged $100bn in new spending in the US, Micron Technology plans $200bn in manufacturing projects, and Nvidia has announced a $500bn plan to build AI servers and supercomputers entirely in America.
The agreement with Nvidia and AMD marks a rare compromise balancing geopolitical caution with commercial necessity in the high-stakes race for AI dominance.
