Two of America’s biggest semiconductor giants, Nvidia and Advanced Micro Devices (AMD), have reached an unprecedented arrangement with the United States government: to pay 15 per cent of their China-based sales revenue from certain advanced computer chips directly to Washington.
The deal, reported by the Financial Times, is tied to the companies securing export licences for the Chinese market. Nvidia’s contribution will come from sales of its H20 chips — widely used in artificial intelligence (AI) applications — while AMD will make the same percentage payment from sales of its MI308 chips in China. Collectively, the arrangement could see the U.S. government pocket over S$2.5 billion by the end of 2025.
The unusual payment requirement marks the first time American tech firms have agreed to such a revenue-sharing condition in exchange for trade permissions, underscoring the increasingly politicised nature of the global semiconductor industry.
From Ban to Bargain: Trump Reverses Nvidia Export Block
Earlier this year, U.S. President Donald Trump’s administration had barred Nvidia from selling its H20 chips to China, citing fears the technology could help Beijing close the AI development gap with Washington. Critics, including former deputy national security adviser Matt Pottinger and other security experts, argued the chip was a “potent accelerator” of China’s frontier AI capabilities, potentially boosting military advancements.
However, following a meeting between Trump and Nvidia CEO Jensen Huang on 6 August, the President reversed his position, instructing the U.S. Commerce Department to begin granting export licences. Approvals for AMD’s MI308 chip soon followed. The Bureau of Industry and Security, which oversees export controls, confirmed the arrangement would not compromise national security.
Nvidia, for its part, maintains that the H20 chip cannot be repurposed for military use. The company also expressed hope that revised export rules will allow the United States to remain competitive in the global AI hardware market.
Billions at Stake in the Global AI Race
According to analysts at Bernstein, Nvidia is projected to sell over US$15 billion (about S$19.2 billion) worth of H20 chips to China by year’s end, while AMD’s China-bound MI308 sales are expected to total US$800 million (around S$1 billion). At 15 per cent, the U.S. government stands to gain roughly US$2 billion (S$2.5 billion) from the two companies combined.
While the Trump administration has yet to reveal how the funds will be used, industry watchers note that the agreement sets a new precedent in technology trade policy. As geopolitical tensions continue to shape the semiconductor supply chain, the deal reflects Washington’s determination to exert tighter control over AI-related exports while profiting from the lucrative artificial intelligence market.