For the first time, Nvidia and AMD have agreed to give the U.S. government 15% of their revenue from AI chip sales to China. This unprecedented revenue-sharing policy is part of a broader, delicate dance: permitting exports under strict controls while advancing national security and economic interests. Here’s the full picture.
What Just Happened—and Why It Matters
Nvidia and AMD will funnel 15% of earnings from China-bound AI chips—specifically Nvidia’s H20 and AMD’s MI308—to the U.S. government to secure export licenses. This is a bold departure from traditional export control measures, which have historically regulated access, not profits.
The U.S. Commerce Department has resumed issuing export licenses for these chips, marking a partial rollback of earlier restrictions.
The Fallout: Stocks, Strategy, and Reconstruction
- Silver Lining in the Market
The stock market responded positively. Nvidia surged to record highs, and AMD approached a 52-week peak, lifted by the renewed China access. - Heavy Financial Hit Avoided—for Now
While both companies anticipate substantial earnings declines due to the revenue allotment, avoiding the outright ban means they can reclaim billions in revenue.
Strategic Chessboard: National Security Meets Profit
This move is part of a broader strategy that balances:
- Tight national security control over dual-use technologies.
- Preserving U.S. economic interests by allowing chipmakers to keep access to a lucrative Chinese market.
- Diplomatic brinkmanship, signaling both strength and willingness to compromise.
The Challenges Ahead: Backlogs, Backdoors, and Backlash
- Licensing Gridlock
The U.S. Commerce Department is currently grappling with the worst export licensing backlog in over 30 years—leaving billions in chips stuck without approvals. - Suspicion in Beijing
Chinese media have raised red flags—alleging Nvidia’s H20 chips might include hardware “backdoors” intended for remote shutdown. Nvidia has publicly refuted these claims.
Frequently Asked Questions (FAQs)
| Q | A |
|---|---|
| Why must Nvidia and AMD pay 15%? | It’s a new requirement tied to export licenses—effectively a fee for access to the Chinese market. |
| Which chips are involved? | Nvidia’s H20 and AMD’s MI308—AI-specific chips designed to meet U.S. compliance lines. |
| What triggered this arrangement? | It follows an earlier U.S. ban on AI chip exports to China. Export controls were partially lifted after lobbying, high-level discussions, and license resume. |
| What impact does this have on earnings? | Nvidia and AMD avoid massive market bans, but the 15% revenue share will cut into profitability. |
| Are there security concerns from China’s side? | Yes. Chinese media raised concerns about backdoor capabilities in H20 chips. Nvidia firmly denied these allegations. |
| Will this become a standard policy tool? | If successful, we may see similar revenue-sharing approaches introduced across sensitive export domains. |
Final Takeaway
This isn’t just a trade policy change—it’s a diplomatic and economic pivot. By extracting direct revenue from AI chip sales, the U.S. government found a creative, if controversial, compromise: safeguarding technology control while allowing corporate access to vital markets.
As AI competition intensifies, expect more such unconventional strategies shaping the tech era.
Sources The New York Times
