U.S. authorities to seize a portion of AI chip sales from Nvidia and AMD, destined for China
The U.S. government has finalised a financial agreement with Nvidia and AMD, allowing the chipmakers to export specific artificial intelligence (AI) chips to China in exchange for paying the U.S. government 15% of their revenue from those sales.
The deal, which was agreed to last week, enables Nvidia to export its H20 AI chip, and AMD to export its MI308 chip. The arrangement came about following a meeting between Nvidia CEO Jensen Huang and President Trump in early August 2025.
This deal is unusual as export controls have traditionally been used to protect national security, not to generate government revenue. The 15% revenue share has raised constitutional questions because the U.S. Constitution explicitly forbids export taxes, and some experts have described the deal as unprecedented, potentially resembling an export tax or even blackmail.
The Trump administration’s revenue-sharing deal could generate over $2 billion by year's end based on projected China sales, with $15 billion expected from Nvidia’s H20 and $800 million from AMD’s MI308. However, analysts have expressed skepticism about the strategic value of this deal, highlighting that it might weaken Washington’s ability to compete against China in the AI race rather than strengthen it.
Nvidia’s H20 chip is regarded as ideal for running some calculations that power AI and has better performance than those offered by its Chinese rival, Huawei. The H20 chip, approved for sale by the Biden administration, is less powerful than the chips Nvidia sells to U.S. businesses and allies. On the other hand, AMD has an AI chip called the MI308, and the Trump administration also banned sales of it to China in April.
The deal is controversial among national security experts who have been opposed to AI chip sales to China. A group of national security officials wrote a letter to the administration in July, calling the policy change "a strategic misstep that endangers the United States' economic and military edge in artificial intelligence."
The Trump administration will continue to prevent China from buying Nvidia’s most advanced chips. Jensen Huang, Nvidia’s CEO, argued that preventing AI chip sales would hurt U.S. tech companies and allow Huawei to dominate sales in China.
In summary, the agreement enables Nvidia and AMD to export AI chips to China under strict conditions tied to revenue sharing with the U.S. government, but it raises constitutional, strategic, and ethical concerns about using export controls as a revenue tool rather than purely for national security reasons. The deal's implications for the race between the United States and China to develop AI are significant.
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