Chip giants Nvidia (NVDA) and Advanced Micro Devices (AMD) have agreed to pay the U.S. government 15% of the revenue from the sales of their advanced chips used for artificial intelligence (AI) to China, the Financial Times reported, citing a U.S. official. Separately, on Friday, the Financial Times reported that the U.S. government has started issuing licenses to Nvidia for the sale of H20 chips to China following a meeting with CEO Jensen Huang earlier in the week.
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Nvidia and AMD have reportedly agreed to this arrangement of paying 15% of their chip sales to China in exchange for export licenses to sell the H20 and MI308 chips, respectively.
Nvidia and AMD to Pay 15% of China Chip Sales to U.S.
Noting that the “quid pro quo arrangement is unprecedented,” the Financial Times stated that no U.S. company has ever agreed to shed a portion of its revenues to secure export licenses. The report noted the Trump administration’s practice of urging companies to pursue measures like domestic investments to prevent tariffs and ensure more jobs and manufacturing in America.
In April 2025, the Trump administration took a tougher stance by deciding that Nvidia would not be allowed to sell its H20 chips to China. However, Trump reversed his stance after a meeting with CEO Huang.
Following the news of the 15% payment arrangement, a Nvidia spokesperson said, “We follow rules the U.S. government sets for our participation in worldwide markets.” The spokesperson added that Nvidia hasn’t shipped its H20 chips to China for months, and that the company hopes that the export control rules will let the U.S. compete in China and worldwide.
The granting of the export licenses is expected to boost the sales of Nvidia and AMD, given that China is a key market for both semiconductor companies. In the Fiscal Year that ended on January 26, 2025, Nvidia generated $17 billion, or 13% of its overall revenue, from China. Meanwhile, revenue from China accounted for $6.2 billion or 24% of AMD’s overall top line in 2024.
Trump’s Reversal of Chip Export Restrictions Faces Criticism
Trump’s reversal of his stricter stance on chip export restrictions is being criticized by many. For instance, according to Reuters, Alasdair Phillips-Robins, who served as an adviser at the Commerce Department during former President Joe Biden’s administration, stated, “If this reporting is accurate, it suggests the administration is trading away national security protections for revenue for the Treasury.”
Also, the Financial Times stated that in a recent letter to Commerce Secretary Howard Lutnick, Matt Pottinger, a China expert who served as a deputy national security adviser in Trump’s first term, and 19 other security experts requested the U.S. government not to grant H20 chip export licenses. They contended that the H20 chip was a “potent accelerator of China’s frontier AI capabilities” and would ultimately be used by the Chinese military. However, Nvidia refuted the claims, saying that they were “misguided” and rejected the argument that China could use the H20 for military purposes.
Meanwhile, reports have surfaced that Beijing is concerned about H20 chips presenting backdoor security risks – a hidden method of bypassing normal authentication or security controls. In response, Nvidia stated that its chips had no “backdoors” that would allow remote access or control.
Wall Street’s Ratings on NVDA and AMD Stocks
Wall Street has a Strong Buy consensus rating on Nvidia stock based on 35 Buys, three Holds, and one Sell recommendation. The average NVDA stock price target of $186.57 indicates 2.1% upside potential. NVDA stock has risen 36% so far this year, while AMD has rallied 43%.
Meanwhile, Wall is cautiously optimistic on Advanced Micro Devices stock, with a Moderate Buy consensus rating based on 26 Buys and 12 Holds. The average AMD stock price target of $181.36 implies about 5% upside potential.
