Nvidia and AMD face 15% US cut on China chip
Nvidia and AMD face 15% US cut on China chip revenue, and it’s turning heads across tech and trade halls. Under this headline-grabbing deal, both chip giants have agreed to give the U.S. government a 15% slice of their revenue from AI chip sales in China a rare revenue-sharing arrangement tied to new export licenses condition. It’s bold, it’s novel, and it’s packed with strategic implications.
What’s happening?
In a striking twist, Nvidia and AMD must now part with the 15% US cut on China chip revenue to secure permission to export two key AI chips Nvidia’s H20 and AMD’s MI308 to China. This unusual AI chip export fee wasn’t how trade deals usually work, but it’s how this one landed. Sources from the Financial Times and confirmed by Reuters detail how the U.S. Commerce Department rolled out new licenses following a high-profile meeting between Nvidia CEO Jensen Huang and former President Trump.
Why this matters
This export licenses condition marks a quirky twist in trade policy. Normally, export controls focus on outright bans or restrictions. Now, revenue-sharing enters the mix, prompting critics to ask: Are we trade-challenged or securitized? As Geoff Gertz from the Center for New American Security put it, “It’s wild”.
China represents a massive chunk of business for both companies 13% of Nvidia’s revenue (around $17 billion) and a whopping 24% for AMD (~$6.2 billion). That makes this 15% fee a heart-punch to their bottom lines.
The corporate reactions
Nvidia played it cool, stating they “follow rules the U.S. government sets for our participation in worldwide markets,” without confirming the revenue-sharing tie explicitly. AMD stayed mum. On the U.S. side, officials have yet to explain how they’ll use the collected funds.
Broader impact and investor buzz
Wall Street responded fast: investors bet on the restored China access. The Nasdaq hit record highs, fuelled by AI stock optimism, especially for Nvidia and AMD amid the 15% US cut on China chip revenue news.
But the bigger picture? It’s a geopolitical tug-of-war. Trade experts argue the U.S. may be exchanging national security posture for a revenue stream, muddying policy clarity.
Where things stand now
- Export licenses resumed: Nvidia can again ship its H20 chips, and AMD is nearing approval for the MI308.
- Revenue hit mix: Nvidia took a $5.5 billion charge earlier due to export restrictions; AMD faced ~$800 million in losses.
- Strategic balancing: For tech companies, the AI chip export fee isn’t just a cost it’s also the price of market access.
What’s Next for Nvidia and AMD
Nvidia, AMD face 15% US cut on China chip revenue, a phrase that captures the tension of today’s crossroads between trade, tech, and policy. It’s a move that feels equal parts creative leverage and risky precedent. As the global tech race heats up, this deal signals that trade policy is no longer just about yes or no. Now, it’s also about “what price?”
