Chipmakers NVIDIA and AMD Agree to Pay 15% of China Chip Revenues to U.S. Government, Europe Markets Post Mild Gains

By / / Breaking News

Key Takeaways

  • NVIDIA (NVDA) and Advanced Micro Devices (AMD) have agreed to remit 15% of their revenues from AI chip sales in China to the U.S. government as a condition for obtaining export licenses.
  • This "unprecedented" arrangement, negotiated under the Trump administration, allows the resumption of sales for specific chips like NVIDIA's H20 and AMD's MI308 into the crucial Chinese market, following previous export restrictions.
  • European stock markets opened with mild gains on Monday, reflecting broader market optimism, including hopes for a resolution in the Ukraine-Russia conflict, despite the unusual nature of the chip revenue-sharing agreement.
  • The deal balances market access for chipmakers with a new financial concession to the U.S. government, potentially generating billions of dollars for the U.S. Treasury.

U.S. semiconductor giants NVIDIA (NVDA) and Advanced Micro Devices (AMD) have reportedly struck an extraordinary deal with the U.S. government, agreeing to pay 15% of their revenues derived from artificial intelligence (AI) chip sales in China to the U.S. Treasury. This unprecedented arrangement serves as a prerequisite for securing export licenses, allowing the companies to resume sales of their specialized AI chips, such as NVIDIA's H20 and AMD's MI308, to the Chinese market.

The agreement, first reported by the Financial Times and widely confirmed by other media outlets, marks a significant shift in U.S. technology export controls, which traditionally focus on national security rather than revenue generation for Washington. The licenses were granted last week by the Commerce Department, reversing earlier bans that had significantly impacted the chipmakers' access to one of their largest markets.

For NVIDIA, this could mean that out of projected H20 sales in China of up to $23 billion in 2025, approximately $3.45 billion would be remitted to the U.S. government. AMD faces a similar 15% cut on its MI308 sales. While the deal provides critical market access, it introduces a new layer of complexity and a direct financial cost for the companies operating within a highly competitive and geopolitically sensitive sector.

Despite the unusual nature of this revenue-sharing pact, European stock markets opened with mild gains on Monday. Equity-index futures for both the U.S. and Europe rose, with contracts for European shares gaining 0.3% and the S&P 500 Index climbing 0.2%. This positive sentiment was partly driven by broader market optimism, including speculation of progress in U.S.-Russia peace talks aimed at ending the war in Ukraine.

The initial market reaction to the chip revenue news itself was somewhat muted for NVIDIA and AMD stocks, with some analysts noting that while the 15% payment compresses margins, the ability to sell into China is ultimately a net positive compared to a complete ban. The agreement highlights the Trump administration's strategy of seeking financial concessions in return for trade access, a model previously seen in other sectors. However, some economists and experts have raised questions about the constitutionality and precedent set by such an "export tax."

Disclaimer: This article is for informational purposes only and does not constitute financial advice. We are not financial professionals. The authors and/or site operators may hold positions in the companies or assets mentioned. Always do your own research before making financial decisions.
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