Nvidia Corporation NVDA and Advanced Micro Devices, Inc. AMD have reportedly agreed to pay 15% of their China chip sales revenues to the U.S. government as part of their deal for export licenses.
The Unusual Deal Between US Chipmakers And The Trump Administration
Nvidia and AMD, two of the leading chipmakers in the world, have entered into an unprecedented agreement with the Donald Trump administration, agreeing to give 15% of their revenues from chip sales in China to the U.S. government, reported the Financial Times on Sunday, citing people familiar with the matter, including a U.S. official.
This deal was reportedly a condition for receiving export licenses, allowing both companies to sell their advanced AI chips, the H20 and MI308, to the Chinese market.
Security Concerns And Political Fallout
The arrangement has sparked controversy, particularly among U.S. security experts who worry that the chips, particularly the H20, could be used by China’s military, thereby undermining U.S. strategic interests in artificial intelligence.
Liza Tobin, a former National Security Council official, stated, “Beijing must be gloating to see Washington turn export licenses into revenue streams,” the report said.
Despite these concerns, Nvidia defended the decision, with a company spokesperson telling the publication, “We follow rules the U.S. government sets for our participation in worldwide markets.”
Nvidia CEO Jensen Huang, who last month met with President Trump, highlighted the importance of remaining competitive in China.
Nvidia, AMD’s Market Position And Growing Competition
The move also highlights the growing competition Nvidia and AMD face from Chinese chipmakers like Huawei Technologies and Cambricon.
Analysts predict that Nvidia’s market share in China’s AI chip sector will decline in 2025, largely due to local companies’ aggressive growth and the impact of U.S. sanctions.
Price Action: Over the past five days, Nvidia shares have risen 4.30%, while AMD has slipped 0.95%. Year to date, Nvidia is up 32.12% and AMD has climbed 43.31%, according to Benzinga Pro.
Benzinga’s Edge Stock Rankings indicate that AMD maintains a strong upward price trend across short, medium and long-term periods. Additional performance details are available here.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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