Key Takeaways
- Nvidia (NVDA) and Advanced Micro Devices (AMD) have agreed to remit 15% of their revenues from specific AI chip sales in China directly to the US government.
- This unprecedented arrangement is a condition set by the Trump administration to grant export licenses, enabling the tech giants to resume shipments of their H20 (Nvidia) and MI308 (AMD) chips to the crucial Chinese market.
- The decision marks a significant policy reversal by the US, which had previously tightened restrictions even on these less-advanced chips designed to comply with earlier export controls, and is expected to add billions to Nvidia's revenue.
- The agreement follows recent high-level discussions, including a meeting between Nvidia CEO Jensen Huang and President Donald Trump, signaling a thawing in the broader US-China trade relationship.
US semiconductor giants Nvidia (NVDA) and Advanced Micro Devices (AMD) have reportedly reached an agreement with the Trump administration to pay 15% of their revenues generated from certain chip sales in China to the US government. This concession is a prerequisite for obtaining the necessary export licenses to sell their specialized AI chips in the lucrative Chinese market.
Under the terms of the agreement, Nvidia will share 15% of revenues from its H20 chip sales in China, while AMD will apply the same percentage to its MI308 chip revenues. These specific chips were developed by the companies to meet earlier US export control regulations, which aimed to limit China's access to advanced artificial intelligence technology. However, the Trump administration had further tightened these restrictions in April, effectively blocking sales of even these compliant chips without a special permit.
The move represents a dramatic shift in Washington's stance on semiconductor exports to Beijing. For Nvidia, the resumption of sales for its H20 artificial intelligence accelerator could inject billions of dollars into its revenue streams, recovering orders that had been written off due to the prior government restrictions. AMD has also received assurances from the US Commerce Department regarding its MI308 chips, with plans to restart shipments once licenses are approved.
This development comes amidst a broader de-escalation of trade tensions between the United States and China. Nvidia CEO Jensen Huang recently met with President Trump at the White House, advocating for continued access to the Chinese market to avoid jeopardizing US leadership in AI. The agreement is seen by some as part of an opaque trade truce designed to facilitate the approval of crucial technology exports between the two economic superpowers.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.