In a move that’s raising eyebrows across tech and trade circles, Nvidia and AMD have agreed to hand over 15% of their revenue from advanced chip sales to China in exchange for export licences to the lucrative market.
The arrangement marks a sharp shift from the US’s recent hardline stance on tech exports to China. For years, Washington has restricted shipments of high-performance chips over fears they could power AI systems or weapons that threaten US national security. Nvidia’s H20 and AMD’s MI308 chips, both in high demand, were banned from sale to China earlier this year.
Now, that ban has been reversed under a deal reportedly linked to China’s easing of rare earth export restrictions. The US commerce department has begun issuing licences for the H20, while AMD is expected to follow suit for the MI308. In return, both chipmakers will give the US government a 15% cut of revenue from Chinese sales of these chips.
The decision comes after Nvidia CEO Jensen Huang met with both US President Donald Trump and Chinese officials in recent months. Trump, who has praised Nvidia’s role in the AI boom, rolled back the restrictions last month despite previously threatening steep tariffs on foreign semiconductors.
Critics are calling the deal potentially unconstitutional. Peter Harrell, a former White House senior director for international economics, pointed out that the US constitution forbids export taxes. Others warn it could undermine the credibility of export controls, especially with allies in the EU and East Asia.
Ilaria Carrozza, senior researcher at the Peace Research Institute Oslo, questioned the logic: if security restrictions can be bypassed with a payment, what message does that send to other nations being urged to impose similar controls?
With the US-China tariff truce set to expire this week, the timing of this deal is significant. Analysts at Goldman Sachs note that while US companies have so far absorbed most of the costs of Trump’s tariffs, consumers may soon bear the bulk, potentially up to 67% of the costs.
The move might open doors for American chipmakers in China, but it also stirs up bigger questions about policy consistency, constitutional limits, and the fine line between security and profit.
Source: This blog is based on reporting from The Guardian.
