Nvidia and Advanced Micro Devices have agreed to give the U.S. government 15% of their revenue from chip sales in China as part of an unusual deal with the Trump administration to obtain semiconductor export licenses. The two chipmakers agreed to the financial arrangement as a condition of receiving export licenses for the Chinese market issued last week, according to people familiar with the matter, including a U.S. official.
The U.S. official said Nvidia agreed to share 15% of its H20 chip sales in China, and AMD would share the same proportion of its MI308 chip sales. The Trump administration has not yet determined how the funds will be spent, two people familiar with the matter said.
The Financial Times reported on Friday that the U.S. Commerce Department began issuing H20 export licenses on Friday, two days after Nvidia CEO Jensen Huang met with U.S. President Donald Trump. U.S. officials said the U.S. government has also begun issuing licenses to AMD chips produced in China.
This mutually beneficial arrangement is unprecedented. No U.S. company has ever agreed to pay a portion of its revenue to obtain an export license, according to export control experts. But the agreement is consistent with the Trump administration's approach: The president urges companies to take steps, such as investing domestically, to protect themselves from tariffs and thereby create jobs and revenue in the United States.
AMD did not respond to a request for comment. Nvidia has not denied agreeing to the arrangement. "We comply with the rules set by the U.S. government for our participation in global markets," the company said.
Analysts at Bernstein estimate that Nvidia would sell about 1.5 million H20 chips to China by 2025, generating about $23 billion in revenue, based on its guidance before the controls were imposed earlier this year.
Previously, the H20 chip caused controversy. Nvidia customized its H20 chips for the Chinese market after U.S. President Joe Biden imposed strict export controls on more advanced chips used in artificial intelligence.
In April this year, the Trump administration announced that it would ban the export of H20 to China. However, Trump changed his position after meeting with Huang at the White House in June. In the following weeks, Nvidia became concerned because the U.S. Bureau of Industry and Security (BIS), the U.S. Department of Commerce agency responsible for export controls, had not yet issued any licenses.
Huang raised the issue with Trump on Wednesday, and the Bureau of Industry and Security began issuing licenses on Friday, according to people familiar with the matter.
The deal to sell the H20 chip comes as Nvidia and the Trump administration face criticism for selling the chip to China. U.S. security experts say H20 will empower the Chinese military and weaken U.S. capabilities in artificial intelligence.
“Beijing must be elated to see Washington turning export licenses into a revenue stream,” said Liza Tobin, a China expert who served on the National Security Council in Trump’s first administration and now works at the Jamestown Foundation. “What’s next — have Lockheed Martin sell F-35s to China for a 15 percent commission?”
Some U.S. Department of Commerce Bureau of Industry and Security officials also expressed concern about the reversal, according to people familiar with the matter.
In a recent letter to Commerce Secretary Howard Lutnick, China expert Matt Pottinger, who served as Trump's deputy national security adviser during his first term, and 19 other security experts urged the United States not to issue H20 licenses.
They said the H20 is a "powerful accelerator of China's cutting-edge artificial intelligence capabilities" and will eventually be used by the Chinese military. Nvidia said the claims were "misleading" and denied that China might use the H20 for military purposes.
Nvidia said on Saturday: "While we have not exported H2O to China for several months, we hope that export control rules will allow the United States to compete in China and globally. The United States cannot repeat the destruction of 5G and lose its leadership in the telecommunications industry. If we compete, the United States' artificial intelligence technology stack can become the world standard."
The debate in Washington over chip export controls comes as the United States and China hold trade talks that Trump hopes will pave the way for a summit with Chinese President Xi Jinping. The Financial Times previously reported that the U.S. Department of Commerce has been told to freeze new export controls to China to avoid angering Beijing.
There are concerns that Trump may ease regulations to please China, while Beijing is pushing to loosen controls on high-bandwidth memory (HBM) chips, a key component in making advanced artificial intelligence chips.