The US government will receive 15% of revenue from Nvidia and AMD’s sales of certain advanced chips to China.

White House press secretary Karoline Leavitt said the arrangement could potentially extend to other chipmakers, but details are still being finalized by the Department of Commerce.

The agreement covers export licenses for Nvidia’s H20 AI chip, which is designed specifically for the Chinese market to comply with US export controls.

AMD also received export licenses in exchange for a share of China sales, the White House said.

Legal experts have raised questions about the deal’s compliance with existing laws on export licensing fees.

The US restricts advanced AI chip exports to China over security concerns, while China has advised firms to avoid Nvidia’s H20 for sensitive uses.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Revenue-sharing export licenses mark departure from traditional licensing framework

Trump’s 15% revenue-sharing arrangement with Nvidia and AMD represents an unusual approach compared to standard U.S. export licensing practices.

Traditional export control systems focus on national security reviews rather than government revenue generation, with agencies like Commerce, State, and Treasury processing over 130,000 license applications annually based on security assessments1.

The standard framework involves extensive multi-agency reviews including the Department of Defense and intelligence community, with decisions based on national security considerations rather than financial arrangements1.

This model introduces a commercial element into what has historically been a regulatory process, potentially setting a precedent for monetizing export controls that could extend beyond semiconductors to other sensitive technologies.

2️⃣ Chinese market dependency drives semiconductor companies toward costly compromises

The willingness of Nvidia and AMD to accept 15% revenue cuts demonstrates the critical importance of Chinese market access to U.S. chip companies.

China represents 31.4% of global semiconductor purchases as of 2022, making it an essential market that companies cannot afford to lose entirely2.