U.S. chipmakers Nvidia and AMD have struck an “unprecedented” agreement with Washington to pay 15% of their Chinese revenues in exchange for licences to resume selling certain high-powered chips to China.
The deal, confirmed to the BBC by industry sources, allows the companies to restart exports of products previously banned under national security restrictions — controls designed to limit Beijing’s access to advanced artificial intelligence (AI) technology.
In 2023, the Biden administration barred the sale of cutting-edge AI chips to China, prompting Nvidia to design the H20 chip specifically for that market. But in April this year, the Trump administration extended restrictions, effectively banning H20 sales as well.
AMD faced similar challenges with its MI308 chip. Both chips, experts say, could significantly boost China’s AI capabilities, including potential military applications.
Security specialists have warned that AI-optimised chips could power autonomous weapons, surveillance systems, and advanced battlefield decision-making.
Under the new arrangement, Nvidia will pay 15% of revenue from H20 chip sales in China to the U.S. government. AMD will do the same for MI308 sales.
Nvidia’s CEO, Jensen Huang, has lobbied intensively for a resumption of China sales, meeting with President Donald Trump last week.
But critics question whether a payment solves the original national security concerns. “If you have a 15% payment, it doesn’t somehow eliminate the national security issue,” said Deborah Elms, head of trade policy at the Hinrich Foundation.
Nvidia insists that keeping American firms in the Chinese market is critical for U.S. technological leadership. “America’s AI tech stack can be the world’s standard if we race,” the company said in a statement.
Industry analyst Charlie Dai of Forrester called the deal “unprecedented” and said it reflects the “high cost of market access” amid ongoing tech trade tensions.
The agreement comes as the U.S. and China cautiously ease trade hostilities. Beijing has relaxed rare earth export controls, while the U.S. has loosened some restrictions on chip design software. The two countries are currently in a 90-day tariff truce set to expire on 12 August.
The deal also aligns with Trump’s pressure on major tech firms to ramp up U.S. investments. Apple recently pledged an additional $100bn in U.S. spending, Micron Technology announced $200bn in domestic projects, and Nvidia plans to build up to $500bn worth of AI servers in the U.S.
Meanwhile, Intel’s CEO is set to meet Trump after the president publicly questioned his ties to China, a claim the executive has dismissed as “misinformation.”
