Chinese officials encourage local businesses to avoid using Nvidia chipsets
In a significant policy shift, the U.S. government has agreed to a revenue-sharing deal with tech companies Nvidia and AMD, allowing them to resume some sales of advanced AI chips to China. This development comes after a period of strict export bans, particularly under the Biden administration, and represents a partial reversal of the April 2025 export ban.
Under this deal, the companies will remit 15% of their AI chip sales revenue in China to the U.S. government. The new terms aim to monetize a market that cannot be fully closed off while acknowledging that export restrictions alone will not prevent China's AI chip development and may even accelerate its independent efforts.
The U.S. export restrictions have been in place since 2022, affecting Nvidia's H20 chips and AMD's MI308 chips, among others. Initially, Nvidia's H800 chips, designed to comply with Biden-era restrictions, were also banned in 2023. In response, Nvidia offered the H20 chips with reduced performance to Chinese companies.
Nvidia and AMD have not commented on the specifics of the deals to Bloomberg. However, Nvidia has stated that H20 is not a military product and is not intended for use in state infrastructure. AMD, on the other hand, declined to comment on the specifics of the MI308 deal.
China has been pushing for a relaxation of export controls on high-bandwidth memory (HBM) chips used in AI chip production during trade talks with the U.S. The New York Times estimates that this could generate over $2 billion for the U.S. authorities, but the Trump administration has not yet decided how to use these funds.
The U.S. restrictions on HBM chips were introduced in 2024 under the administration of former U.S. President Joe Biden. Reports indicate that several companies, including Nvidia and possibly AMD, have received letters from Beijing regarding the use of AI chips.
Experts argue that overly aggressive export restrictions risk backfiring by motivating China to accelerate self-reliance in semiconductor technologies. The new compromise attempts to balance national security concerns with economic interests and global supply chain realities.
By mid-July 2025, Nvidia announced that the U.S. government had promised to issue licenses for the supply of H20 to China. Following Nvidia, AMD also announced plans to resume sales of MI308 to China. On August 11, The New York Times and Financial Times reported that Nvidia and AMD had reached a deal with the administration of U.S. President Donald Trump.
This development marks a nuanced policy shift, trying to manage competitive risks and economic impacts. It remains to be seen how this will impact the global semiconductor market and the technological advancements in China and the U.S. in the long run.
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