Nvidia and AMD's unprecedented China chip deal
Washington, Monday, 11 August 2025.
Nvidia and AMD will pay 15% of their China chip sales revenue to the U.S. government. This agreement is a condition for obtaining export licenses. The Financial Times reported the agreement. This arrangement comes as tariffs continue to impact the global economy. Nvidia’s H20 and AMD’s MI308 chips are affected. Nvidia CEO Jensen Huang met with President Trump last week. Trump had threatened a 100% tariff on imported semiconductors unless companies built in the U.S.
China chip sales and export licenses
Nvidia and AMD have agreed to allocate 15% of their revenue from AI chip sales in China to the U.S. government [1][3][5]. This arrangement is a prerequisite for securing export licenses, following temporary bans imposed by the U.S. government [1]. The Financial Times reported this agreement, citing sources including U.S. government officials [1]. The agreement emerges amid ongoing trade and tariff tensions [1]. Nvidia’s H20 and AMD’s MI308 chips are subject to this revenue share [1][5].
Nvidia’s response and market context
An Nvidia spokesperson stated that the company adheres to the rules set by the U.S. government for global market participation [3]. The U.S. government reversed an April ban on sales of the H20 chip to China [3]. Nvidia had tailored the chip to comply with U.S. export controls [3]. The Commerce Department began issuing licenses for Nvidia’s H20 chips last week, which allows access to a key market [3]. Nvidia hopes export control rules will allow America to compete in China and worldwide [3].
Impact on Nvidia’s stock (NVDA:NASDAQ)
The agreement introduces a new financial dynamic for Nvidia’s operations in China [1][3]. The 15% revenue share could affect profit margins on sales of H20 chips in China [alert! ‘actual impact depends on sales volume and pricing strategies’]. Investors will likely scrutinize Nvidia’s financial reports to assess the impact on overall revenue and profitability [GPT]. The need to share revenue could influence Nvidia’s pricing strategies and competitive positioning in the Chinese market [alert! ‘specific pricing and competitive responses are currently uncertain’]. Maintaining market share while adhering to the new financial terms will be a key challenge [GPT].
Competitive landscape and strategic implications
The agreement impacts Nvidia’s competitive advantage in China’s AI chip market [1][3]. Chinese companies such as ByteDance and Tencent are reportedly seeking to purchase Nvidia’s H20 chips [6]. A “white list” managed by Nvidia determines which Chinese companies are eligible to express potential purchasing intentions [6]. This arrangement may incentivize Nvidia to further innovate and optimize its chip offerings to maintain competitiveness despite the revenue share [GPT]. The long-term effects on Nvidia’s market position will depend on its ability to navigate these regulatory and financial constraints effectively [GPT].