Nvidia and AMD allegedly sharing a portion of their China GPU earnings with authorities in exchange for export licenses, marking an unprecedented revenue-sharing agreement in the industry.
In a groundbreaking move, the U.S. government has agreed to allow Nvidia and AMD to export previously restricted chips to China, in exchange for a 15% revenue share. This deal, which has been confirmed by multiple news outlets including Reuters, BBC, and FT, could potentially generate hundreds of millions of dollars per quarter for the U.S. Treasury.
According to reports, Nvidia generated approximately $17 billion in revenue from China in its latest financial year, accounting for around 13% of its total sales. AMD's China revenue was about $6.2 billion, representing around 24% of its total revenue in 2024. If sales return to previous levels with the 15% revenue-sharing applied, analysts estimate that the U.S. government could collect hundreds of millions of dollars each quarter through this deal.
The deal is unprecedented as export licenses traditionally do not come with such a revenue share. This 15% cut applies to revenue from the AI chips specifically authorized for export—Nvidia’s H20 and AMD’s MI308. The restrictions on exports of AI accelerators were originally put in place due to national security concerns.
Nvidia's statement repeated arguments in favor of relaxed cutting-edge technology export controls, stating that America cannot afford to repeat mistakes made in 5G and telecommunication leadership. AMD has not made a public statement regarding the deal, but their China business generated $6.2 billion in revenue in 2024.
The resumption of sales of Nvidia's H20 chips and AMD's MI308 accelerators in China is expected to significantly increase both companies' yearly revenue figures. However, the deal, when judged purely on financial terms, is considered 'small potatoes' for a country like the U.S.
Safety concerns regarding Chinese-sourced semiconductors and electronics seem to be a tit-for-tat response to Western powers. Chinese state media has reportedly characterized Nvidia H20 GPUs as "neither environmentally friendly, nor advanced, nor safe." Nvidia has strenuously denied the existence of any kill switches, back doors, or spyware in its GPUs. The company states that they follow U.S. government rules for worldwide market participation.
This deal marks a significant shift in the strategy regarding the export of such potent AI accelerators. It remains to be seen how this will impact the global semiconductor industry and the geopolitical landscape.
[1] Source: Reuters, BBC, FT [2] Source: Analyst estimates [3] Source: Nvidia and AMD financial reports [4] Source: U.S. Commerce Department [5] Source: Reuters, BBC, FT reports on the deal
- The revenue generated from Nvidia and AMD's exports of their AI chips to China, such as the H20 and MI308, under the new deal could, potentially, contribute significantly to the US Treasury's quarterly earnings, especially considering Nvidia's $17 billion revenue from China and AMD's $6.2 billion, which account for around 13% and 24% of their total sales respectively.
- As the high-tech industry, particularly finance and business sectors, are increasingly leveraging advanced technology like AI for growth and innovation, the unprecedented deal allowing Nvidia and AMD to export AI chips to China could have far-reaching implications for the global technology landscape.
