Nvidia and AMD to Pay U.S. Government from China Sales
On August 11, 2025, it was reported that Nvidia and AMD have reached an agreement to allocate 15% of their revenue from sales of advanced computer chips to China to the U.S. government. This decision, indicated by a U.S. official, appears to be a surprising turn for American companies.
President Donald Trump’s administration had previously halted the sale of H20 chips to China back in April. However, Nvidia revealed last month that the U.S. had allowed them to resume sales, and the company is looking to start deliveries soon.
In a related development, a separate U.S. official mentioned that the Commerce Department has started issuing licenses for the sale of H20 artificial intelligence chips to China.
Both officials spoke anonymously as the details of the situation are still pending public disclosure.
Analysts express concerns that this new levy could negatively impact the profit margins for both companies. As a result, Nvidia and AMD shares saw a decline of approximately 1% and nearly 2%, respectively, during premarket trading on Monday.
This arrangement to pay the U.S. on sales in China is somewhat unconventional, highlighting Trump’s ongoing involvement in business decision-making. He has been urging company leaders to invest more in America to support domestic jobs and manufacturing. Recently, he even called for the immediate resignation of Intel’s CEO over ties to Chinese firms, labeling him as “highly conflicted.”
According to the U.S. official, the Trump administration does not believe that selling the H20 chips poses a national security risk. “It’s wild,” commented Geoff Gertz, a senior fellow at a Washington, D.C. think tank. He noted the contradiction: either the chips are a security threat and should not be sold, or they aren’t, making the penalty on sales seem unnecessary.
When approached for comment about the payment agreement, an Nvidia spokesperson stated, “We follow rules the U.S. government sets for our participation in worldwide markets.” The spokesperson also expressed hope that export control rules would enable American competition in China and the global market.
Nvidia has previously indicated that being unable to sell H20 chips to China could lead to a loss of $8 billion in sales for its July quarter. AMD, on the other hand, anticipates a $1.5 billion revenue decline this year due to these restrictions.
AMD has not commented on the report, which was first highlighted by the Financial Times. As both companies rely significantly on the Chinese market, AJ Bell’s investment director remarked that losing some revenue, while not ideal, seems strategically justifiable on paper. Yet, this situation remains unprecedented, carrying the risk that the U.S. could adjust the revenue intake or reinstate previous export controls.
The U.S. Commerce Department has not responded to inquiries regarding this matter. Meanwhile, China’s foreign ministry reiterated its stance on U.S. chip exports, previously accusing the U.S. of using technology and trade as tools to undermine China.
According to the Financial Times, the agreement to pay the U.S. government was necessary for Nvidia and AMD to secure export licenses for their semiconductors, including AMD’s MI308 chips. The Trump administration is still determining how these funds will be utilized.
In another context, Commerce Secretary Howard Lutnick highlighted that resuming AI chip sales aligns with U.S. negotiations with China about rare earth minerals, describing the H20 chip as Nvidia’s “fourth-best chip.” Lutnick stressed that it’s in U.S. interests to have Chinese firms utilizing American technology while still upholding some export restrictions on the most advanced products.
An official who discussed the 15% levy acknowledged uncertainty about the agreement’s implementation and details, asserting that the administration would adhere to the law.
Critics, such as Alasdair Phillips-Robins, a former advisor at the Commerce Department, voiced concerns over the implications of the agreement, suggesting it may sacrifice national security protections for revenue generation.
For context, Nvidia earned $17 billion from China in the fiscal year that ended January 26, comprising 13% of its total sales. In the case of AMD, it reported $6.2 billion in revenue from China for 2024, which accounted for 24% of its overall revenue.
Analysts from Bernstein noted that contributing a portion of sales to the U.S. government could reduce the profit margins of these chips by around 5 to 15 percentage points, which could in turn have a marginal effect overall.
