Nvidia, AMD to pay 15% of China chip sale revenue to U.S. government

Nvidia and AMD agreed to share 15 per cent of their revenues from chip sales to China with the U.S. government, a U.S. government official said on Sunday, in an unusual move likely to faze American companies.

U.S. President Donald Trump's administration halted the sale of advanced computer chips to China in April over national security concerns, but Nvidia and AMD revealed in July that Washington would allow them to resume sales of the H20 and MI308 chips, which are used in artificial intelligence development.

The official, who insisted on anonymity to discuss a policy not yet formally announced, confirmed to The Associated Press the revenue sharing terms of the deal, and said the broad strokes of the initial report by The Financial Times were accurate.

Nvidia and AMD reportedly agreed to the financial arrangement as a condition for obtaining export licences to resume sales to China. AMD said on Monday that the U.S. government had approved its licence applications to export its chips to China.

Nvidia did not comment about the specific details of the agreement or its quid pro quo nature, but said it would adhere to the export rules laid out by the administration.

"We follow rules the U.S. government sets for our participation in worldwide markets. While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide," Nvidia wrote in a statement. "America cannot repeat 5G and lose telecommunication leadership. America's AI tech stack can be the world's standard if we race."

The top Democrat on a House panel focusing on competition with China raised concerns over the reported agreement, calling it "a dangerous misuse of export controls that undermines our national security."

Rep. Raja Krishnamoorthi, the ranking member of the House Select Committee on China, said he would seek answers about the legal basis for this arrangement and demand full transparency from the administration.

"Our export control regime must be based on genuine security considerations, not creative taxation schemes disguised as national security policy," he said. "Chip export controls aren't bargaining chips, and they're not casino chips either. We shouldn't be gambling with our national security to raise revenue."

In July, Nvidia argued that tight export controls around its chip sales would cost the company an extra $5.5 billion. It has argued that such limits hinder U.S. competition in a sector in one of the world's largest markets for technology, and has also warned that U.S. export controls could end up pushing other countries toward China's AI technology.

The deal to pay the U.S. government from sales in China is unusual for a president, and marks Trump's latest intervention in corporate decision-making.

Trump harangues company executives to invest in the United States to shore up domestic jobs and manufacturing. Last week, he demanded new Intel CEO Lip-Bu Tan immediately resign, calling him "highly conflicted" due to his ties to Chinese firms.

"It's wild," said Geoff Gertz, a senior fellow at Center for New American Security, an independent think-tank in Washington, D.C.

"Either selling H20 chips to China is a national security risk, in which case we shouldn't be doing it to begin with, or it's not a national security risk, in which case, why are we putting this extra penalty on the sale?"

Commerce Secretary Howard Lutnick told CNBC in July that the renewed sale of Nvidia's chips in China was linked to a trade agreement made between the two countries on rare earth magnets.

Restrictions on sales of advanced chips to China have been central to the AI race between the world's two largest economic powers, but such controls are also controversial. Proponents argue that these restrictions are necessary to slow China down enough to allow U.S. companies to keep their lead.

Meanwhile, opponents say the export controls have loopholes — and could still spur innovation. The emergence of China's DeepSeek AI chatbot in January particularly renewed concerns over how China might use advanced chips to help develop its own AI capabilities.