United States earns 15% of its chip sales revenue from China.
The U.S. government, under the Trump administration in 2025, agreed to allow Nvidia and AMD to resume sales of specific downgraded AI chips—Nvidia’s H20 and AMD’s MI308—to China, with a condition that both companies pay the U.S. government 15% of revenues from these sales to obtain export licenses. This arrangement reversed an earlier ban imposed in April 2025 and represents a strategic adjustment in U.S. export controls.
The decision has significant implications for both American companies and China's AI development.
Impact on American companies:
Nvidia and AMD benefit by regaining access to the lucrative Chinese AI chip market, enabling continued revenue streams despite tighter export constraints on more advanced processors which remain restricted, like Nvidia’s Blackwell and H200 GPUs. However, the U.S. government's share of 15% from these sales reflects a direct financial gain for the government while complicating the companies' position amid bipartisan concern. Leading Congressional figures from both parties expressed unease about the deal, fearing it may enhance China’s AI capabilities and question the legality and precedent of this revenue-sharing arrangement.
There are concerns about the consistency of U.S. tech policy and the ability of the Commerce Department to effectively enforce these controls across global supply chains, raising questions about the long-term national security rationale.
Impact on China’s AI development:
China has responded ambivalently to the renewed availability of these U.S. chips, with authorities reportedly advising against their use for sensitive government or national security-related projects due to concerns about potential security vulnerabilities, such as "back-door" risks. Beijing’s tepid reception partly stems from its accelerated push toward self-sufficiency in semiconductor technology, aiming to reduce reliance on U.S. imports. Domestic chip production in China is projected to grow significantly, from 17% in 2023 to 55% by 2027, with firms like Huawei developing chips comparable or even superior to the newly approved Nvidia chip.
Despite progress, China still desires access to more advanced AI processors restricted by U.S. controls. The current deal is viewed by China as a temporary engagement rather than a long-term policy shift, reinforcing its drive for technological independence.
In summary, the 15% cut deal symbolizes a complex balancing act: it allows the U.S. to financially benefit and regulate chip exports while limiting China’s access to the most advanced AI chips, even as China accelerates its domestic AI chip capabilities. The policy shift has faced criticism over national security and legal issues and has led to cautious reception and strategic recalibration on both sides.
The 15% revenue-sharing agreement could potentially benefit Nvidia and AMD financially, as they regain access to the Chinese AI chip market. However, the U.S. government's share from these sales may foster artificial-intelligence advancements in China's technology industry, particularly in sectors that are less sensitive to national security.
