Nvidia and AMD Agree to 15% China Chip Sales Levy to US Government Amid Trade Tensions

According to an insider who spoke to the BBC, chip giants Nvidia and AMD have agreed to give the US government 15% of their sales of semiconductors in China. The contract is a component of an agreement to obtain export licences to the second-largest economy in the world.

Financial Impact on Semiconductor Leaders

Nvidia informed the BBC that it will abide by the regulations put forth by the US government in order to participate in global markets. Nvidia expects that export control laws will let America compete in China and around the world, even if it hasn’t exported H20 to China in months.

Nvidia also stated in a statement to the BBC that America cannot lose its position as the leader in telecommunications by replicating 5G. If Nvidia races, America’s [artificial intelligence] tech stack might become the norm globally.

H20 and MI308 Chips in the Chinese Market

According to the agreement, AMD will provide the US government the same percentage of its MI308 chip income as Nvidia will from its H20 chip sales in China, as first reported by the Financial Times. “Unprecedented” is how Charlie Dai, vice president and chief analyst at the international research firm Forrester, described this deal.

The agreement, he continued, highlights the steep price of market access in the face of growing tech trade disputes, putting significant financial strain and strategic uncertainty on tech providers. Nvidia recently declared that it will remove a previous prohibition by Washington on the sale of its H20 chips to Beijing due to security concerns.

Applications for artificial intelligence (AI) make use of these potent devices. “You either have a national security problem or you don’t,” stated Deborah Elms, the Hinrich Foundation’s head of trade policy. “If you have a 15% payment, it doesn’t somehow eliminate the national security issue,” Ms Elms stated to the BBC.

Following the Biden administration’s 2023 imposition of US export restrictions, the H20 chip was created especially for the Chinese market. In April of this year, the Trump administration essentially outlawed its sale. Jensen Huang, the CEO of Nvidia, has been pleading with both parties for months to resume selling the chips in China.

U.S.–China Trade War: A Temporary Truce?

Last week, he reportedly met with US President Donald Trump. Chip sales to China have resumed at a time when trade tensions between Washington and Beijing have been decreasing. The US has removed limitations on chip design software companies that operate in China, while Beijing has loosened controls on exports of rare earth elements.

The two largest economies in the world reached a 90-day truce in their tariff war in May. Top trade officials from both sides have since met several times, but there has been no confirmation of an agreement to prolong the tariff truce before the deadline of August 12.