Trump pressures Nvidia and AMD into forging a multi-billion dollar agreement.
In a move that marks a significant shift in U.S. chip export policy, Nvidia and AMD have reached an agreement with the U.S. government to sell AI processors to China under the condition that they pay 15% of their revenues from these sales to the U.S. government. This deal, which was reported by the Financial Times, comes amidst ongoing U.S.-China technology tensions.
The agreement, which is part of President Donald Trump's pattern of pressuring companies to take actions to secure jobs and revenues for America, has been described as a "quid pro quo" deal, typical of the Trump administration. The deal resolves the months-long uncertainty about access to the Chinese market for Nvidia and AMD.
The deal hinges on Nvidia and AMD's "special treatment," permitting them to export AI chips to China despite broader export controls. The policy aims to balance U.S. technological and economic interests by capturing a revenue share from these sales rather than imposing outright bans.
Under the terms of the deal, Nvidia could potentially sell around 1.5 million H20 chips to China by 2025, generating approximately $23 billion in revenue. A 15% levy on these revenues would amount to over $3.4 billion.
While the deal facilitates Chinese access to advanced U.S.-designed technology, it could incentivize other countries and companies to seek similar arrangements. At the same time, restrictions remain on the most advanced chips, like Nvidia's H20 and AMD's MI301, which have been banned for sale to China since April 2025.
Investors remain on board with Nvidia and AMD despite the unusual deal conditions. Analysts at Bernstein estimate that the deal may initially strain margins for the chipmakers. However, the deal is seen as a breakthrough for Nvidia and AMD, as it provides clarity on their access to the Chinese market.
It is currently unclear what these revenues will be used for by the U.S. government. The exact use of the revenues remains unknown. The potential impact on the price development of the financial instruments of Nvidia (WKN: 918422) is not specified. The deal does not affect the financial positions of Mr. Bernd Foerstch, the board and majority shareholder of the publisher Boerse-Medien AG.
The U.S. government's taking a cut of revenues from sales to China makes this an "export tax" rather than a straightforward embargo, a novel approach in U.S. trade policy. The semiconductor supply chain is global, with these U.S.-designed chips being manufactured abroad and relying on equipment and suppliers from allied countries like the Netherlands and Japan. The U.S. has also pressured key transshipment hubs such as Singapore and the UAE to limit illegal chip diversion to China under existing export controls.
This deal has caused a stir on Wall Street, but it remains to be seen how it will shape the future of U.S.-China technology relations and global chip trade.
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