US Secures 15% Cut from Nvidia and AMD's AI Chip Sales in China 🇺🇸💰
The United States government has struck an unprecedented deal with chip giants Nvidia and AMD, securing a 15% cut from their revenue generated by AI chip sales in China. This arrangement, rooted in export control negotiations, requires Nvidia and AMD to pay the U.S. government 15% of their earnings from sales of specific advanced AI chips in the Chinese market. The key focus chips are Nvidia's H20 and AMD's MI308, tailored versions designed to comply with export restrictions while being sold in China.
This unusual levy, effectively a "sales tax" on Nvidia's China chip sales and AMD's AI chip exports to China, has been imposed as part of securing export licenses from the Trump administration. The deal serves as a financial means for the U.S. to maintain leverage and revenue from one of the most lucrative and strategically significant markets for AI chips, while still restricting the most advanced technology transfers due to national security concerns. 🔒
The 15% cut applies directly to the revenue from these chips, a figure that, given Nvidia’s reported $17 billion in China revenue for the fiscal year ending January 2025 and AMD’s $6.2 billion from China—which constitutes 13% and 24% of their respective global revenues—represents a substantial financial commitment to the U.S. treasury. This tax-like arrangement significantly impacts profit margins for both companies on Chinese sales and introduces a new dynamic in the global semiconductor trade. 📈
A Real-Life Example 📌
A real-life example illustrating the impact of this levy is Nvidia’s H20 chip, a less powerful version of its top-tier H100 AI accelerator. The H20 was specifically engineered for China to navigate U.S. export restrictions. After months of halted sales due to export bans imposed in early 2025, Nvidia resumed H20 shipments to China following the 15% revenue-sharing agreement. This resumption came after NVIDIA's CEO Jensen Huang’s lobbying efforts, including a high-profile meeting with former President Trump, which led to export license approvals. AMD’s MI308 chip followed a similar trajectory under this policy framework.
Controversy and Concerns ⚠️
However, this deal is not without controversy. Critics argue the arrangement either acknowledges a security risk in selling advanced chips to China or is a means of imposing financial penalties while still permitting access. Security experts express concerns that allowing these chips to enter China could erode U.S. technological leadership in AI, yet from a business standpoint, the deal ensures continued market access albeit at a higher operational cost.
Financial Implications 💸
The following chart and table illustrate the financial implications of the U.S. 15% cut on AI chip exports by Nvidia and AMD to China:
| Company | China Revenue FY 2025 (Billion USD) | Portion Subject to 15% Cut (Billion USD) | Amount Paid to US Government (Billion USD) |
|---|---|---|---|
| Nvidia | 17 | 17 | 2.55 |
| AMD | 6.2 | 6.2 | 0.93 |
Impact of US 15% Cut on Nvidia and AMD AI Chip Sales Revenue from China 📊
China Revenue as Portion of Global Revenue 🥧
Nvidia
13% China (Green)
AMD
24% China (Green)
Timeline of Key Events ⏳
This financial arrangement underscores the complex balance between national security, international trade, and technological leadership amid the ongoing global AI boom. It exemplifies how geopolitical considerations are shaping the semiconductor industry's future, with the U.S. government taking an active revenue interest in exports it controls. 🌐
Frequently Asked Questions (FAQs) ❓
What is the Nvidia China chip sales tax and how does it work?
The Nvidia China chip sales tax is a 15% cut from revenue generated by AI chip sales in China, paid to the U.S. government as part of export control negotiations.
How does the AMD China AI chip levy affect the company's profitability?
The levy reduces AMD's profit margins on Chinese sales by 15%, impacting overall profitability given China's 24% share of global revenue.
What does the US 15% cut on AI chip exports mean for Nvidia and AMD?
It means both companies pay 15% of their China AI chip revenue to the U.S., balancing market access with national security.
Why did the US impose a 15% revenue sharing on Nvidia and AMD's China AI chip sales?
To maintain leverage and revenue from China sales while restricting advanced tech transfers for security reasons.
How do the US sanctions on Nvidia AMD China AI chip exports impact global AI development?
They slow tech transfer to China, potentially affecting global AI pace but preserving U.S. leadership.
What chips are included in the Nvidia China chip sales tax agreement?
Key chips include Nvidia's H20 and AMD's MI308, designed to comply with export restrictions.
How significant is the US 15% cut on AI chip exports to companies' overall revenue?
For Nvidia, it's $2.55B on $17B China revenue; for AMD, $0.93B on $6.2B, substantial given market shares.
Can Nvidia and AMD continue selling AI chips to China under the new US regulations?
Yes, with the 15% revenue share and using compliant chips like H20 and MI308.
What security concerns led to the US imposing sanctions on Nvidia and AMD for China AI chip sales?
Concerns over eroding U.S. AI leadership and potential military uses in China.
How might the Nvidia China chip sales tax influence future US-China tech trade relations?
It could set a precedent for revenue-sharing in controlled exports, blending economics with security in trade.
This arrangement marks a new era in how the U.S. governs semiconductor exports to China, blending economic leverage with national security strategy amid the relentless growth of artificial intelligence technologies. The 15% cut on Nvidia and AMD China sales serves as a pivotal development in the global AI chip market and trade policy landscape. 🚀
