Nvidia, AMD to pay US 15% of China chip sales in license deal

Nvidia and AMD have agreed to pay 15% of their China sales revenue from specific chips to the US government to obtain export licenses, according to the Financial Times.

The report said Nvidia will pay this share from its H20 chip sales and AMD from its MI308 chips.

These agreements follow the US Commerce Department’s decision to start issuing H20 export licenses last Friday, two days after Nvidia CEO Jensen Huang met with President Donald Trump.

Earlier this year, the Trump administration halted sales of some advanced chips to China amid rising trade tensions.

Nvidia told the Financial Times that it follows US export rules, while AMD didn’t respond to the paper’s request for comment.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Revenue sharing deal reflects the massive scale of China’s AI chip market

The 15% revenue sharing arrangement becomes significant when viewed against the backdrop of Nvidia’s recent financial performance and China’s market size.

Nvidia’s data center revenue reached $18.4 billion in Q3 2023, representing a 279% year-over-year increase1. While the H20 chips represent just a portion of this business, even a fraction of such revenues would generate substantial government payments.

The arrangement targets China’s $400 billion AI market, where companies like Nvidia had previously faced $5.5 billion in revenue risks due to export restrictions2.

This context suggests the revenue sharing deal could generate hundreds of millions in government payments annually, representing a new model where the US government directly monetizes access to strategic technology markets rather than simply restricting them.

The approach differs markedly from traditional export controls, which typically focus on limiting access rather than creating revenue streams from controlled technology transfers.

2️⃣ Policy shift from export restrictions to controlled market access

The revenue sharing agreement represents a fundamental change in how the US manages strategic technology exports to China.

Previously, the Trump administration had frozen sales of advanced chips to China entirely, forcing companies to develop China-specific compliant chips like Nvidia’s H20 and AMD’s MI3082.