An unexpected and unprecedented deal has been struck between the U.S. government and American chip giants Nvidia and Advanced Micro Devices (AMD), allowing them to resume sales of restricted AI chips to China. The agreement, as confirmed by U.S. officials and first reported by the Financial Times, mandates that both companies will pay 15% of the revenue from these sales to the U.S. government as a condition for securing export licenses.
This unconventional arrangement comes after the Trump administration had previously halted the export of certain advanced AI chips, including Nvidia’s H20 and AMD’s MI308, to China, citing national security concerns. The reversal, which has been described as a “trade-off” by analysts, signals a new and highly unusual approach to U.S. trade policy.
Nvidia, which had been lobbying for months to reopen access to its lucrative Chinese market, is set to pay the fee on sales of its H20 AI accelerator. AMD will follow suit with its MI308 chips. While the deal restores access to a vital market for both companies, it also introduces a significant new cost of doing business. Initial market reaction saw shares of both Nvidia and AMD dip in pre-market trading, reflecting investor uncertainty about the impact on profit margins.
The move has drawn criticism from trade experts and national security officials alike, who question the precedent of monetizing export controls. Critics argue that linking national security measures to financial payments blurs the line between protecting U.S. interests and generating government revenue. Peter Harrell, a nonresident fellow at the Carnegie Endowment for International Peace, stated that the deal sets a “terrible precedent,” while a top Democrat on a House panel focusing on China called it “a dangerous misuse of export controls.”
The U.S. government has not yet specified how the collected funds will be used. For China, the deal allows access to high-end American technology but comes with a new financial and political price, potentially accelerating its efforts to develop domestic alternatives. This unprecedented agreement highlights the increasingly complex and transactional nature of the U.S.-China technology rivalry.
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