NVIDIA and AMD allegedly dividing 15% of their China GPU earnings to secure export licenses, an unusual revenue-sharing agreement possible.
In a groundbreaking move, Nvidia and AMD have agreed to pay the U.S. government 15% of their revenue from AI chip sales to China, under a new export license deal. This agreement marks a significant shift in the export control rules, allowing these tech giants to sell their advanced AI chips to Chinese customers.
The deal, reported by multiple outlets including BBC, FT, and Reuters, but not yet officially announced, permits Nvidia to sell its H20 AI chip and AMD to sell its MI308 AI chip to Chinese customers. The government’s 15% cut is taken from the revenue generated by these restricted chip exports.
The exact annual sales volumes and resulting revenue share have not been disclosed, but this arrangement is characterised as an unprecedented and historic agreement by U.S. authorities and the companies involved. Treasury Secretary Scott Bessent indicated that the revenue collected from this deal would go toward paying down the national debt, and suggested this model might expand to other industries, but no dollar estimates have been provided so far.
The 15% deal only covers the advanced AI chips that require export licenses. It is important to note that the total dollar amount paid by Nvidia and AMD under this arrangement is not publicly estimated or disclosed in the current information.
Nvidia's statement repeated arguments in favour of relaxed cutting-edge technology export controls that have been made previously. The company also stated that they follow the rules the U.S. government sets for their participation in worldwide markets. Nvidia has strenuously denied the existence of any kill switches, backdoors, or spyware in its GPUs, in response to claims made by Chinese state media.
Reuters reports that Nvidia earned $17 billion in revenue from China in its latest financial year, while AMD's China business generated $6.2 billion in revenue in 2024. With the resumption of sales in China, these figures are expected to increase impressively.
The U.S. Commerce Department has reportedly started issuing H20 licenses last Friday, and AMD's licenses were also being inked ahead of the weekend, but no statements about the new 15% revenue-sharing deal have been made by AMD at the time of writing.
This revenue-share deal represents a landmark foray into uncharted territory, as the U.S. government has reportedly agreed to a deal with Nvidia and AMD, where they will pay 15% of China-sourced revenues to unlock export licenses for previously restricted chips.
The restrictions on exports of AI accelerators were originally put in place due to national security concerns. The safety concerns regarding Chinese-sourced semiconductors and electronics are a tit-for-tat response to Western powers.
In conclusion, the annual payment equals 15% of Nvidia’s and AMD’s China AI chip sales revenue as allowed under their export licenses, but the total dollar amount is not publicly estimated or disclosed in the current information. This deal is a significant step towards improving U.S. competitiveness in China and worldwide.
- The agreement between Nvidia and AMD to pay 15% of their revenue from AI chip sales to China, under a new export license deal, is also expected to impact other industries, as suggested by Treasury Secretary Scott Bessent.
- In the tech industry, Nvidia's H20 AI chip and AMD's MI308 AI chip are among the advanced AI chips that will be exported to China, following the new deal, with the government receiving a 15% cut from the revenue generated from these restricted chip exports.
