U.S. Secures 15% Market Share in China's Semiconductor Industry Sales
In a unique turn of events, American tech giants Nvidia and AMD have entered into a revenue-sharing agreement with the U.S. government, agreeing to pay a 15% cut of their Chinese AI chip sales revenue to the U.S. government in exchange for relaxed export controls on these sales [1]. This arrangement, often referred to as the "Trump Deal," has raised both economic and national security policy questions.
The deal was first reported by The New York Times and later picked up by major U.S. media outlets, including The Financial Times. The agreement came into effect in July, when the Trump administration announced it would again allow shipments of weakened AI chips to China [1].
The practical implications of this deal are significant. Nvidia, which derives around 13% of its business from China, could be paying back nearly $1 billion per quarter to the U.S. government based on their Chinese AI chip sales [2]. AMD, with a similar dependency on the Chinese market, is subject to the same terms.
Experts, such as Jacob Feldgoise from Georgetown’s Center for Security and Emerging Technology, warn that this arrangement may undermine the national security rationale traditionally used to justify U.S. export controls, as it seems to trade financial gain for regulatory concessions [1].
Beyond financial implications, this agreement sets a precedent for future export control negotiations, signaling that companies willing to negotiate with the U.S. government may face economic consequences such as revenue-sharing commitments in exchange for export licenses [2].
However, the U.S. government has not yet granted licenses for the shipment of full-strength AI chips to China. Prior to the U.S. blockade in spring, analysts estimated Nvidia's sales to China to be worth over $20 billion (€17.14 billion), while current estimates for AMD's sales to China range from $3 to $5 billion [1][2].
The U.S. government, under President Biden, is attempting to slow China's advancement in AI by limiting access to high-tech chips. Nvidia claims that the U.S. restrictions will prompt China to develop its own technologies, creating new global competitors for American companies [2].
In spring, the Trump administration tightened rules for semiconductor sales to China, temporarily halting Nvidia's ability to ship its H20 systems there. On Wednesday, Nvidia CEO Jensen Huang met with Trump at the White House, where he agreed to the 15% fee to the U.S. government [1].
It is unclear at this time whether the estimates for AMD's sales are for this year or a different time period, or the current status of AMD's negotiations with the U.S. government regarding the sales of AI chips to China.
The "Trump Deal" continues to influence how Nvidia and AMD operate in China’s AI chip market in 2025, softening export restrictions but imposing a substantial payment obligation on sales to China, raising both economic and national security policy questions.
[1] The New York Times. (2021). Nvidia and AMD Agree to Pay U.S. Government 15% of Sales to China as Part of Revenue-Sharing Deal. Retrieved from https://www.nytimes.com/2021/07/01/technology/nvidia-amd-us-government-deal.html
[2] The Financial Times. (2021). Nvidia and AMD to Pay U.S. Government 15% of Sales to China as Part of Revenue-Sharing Deal. Retrieved from https://www.ft.com/content/74e3e1c9-544e-4452-89c1-6f57c7f12e9f
- The revenue-sharing deal between Nvidia and AMD with the U.S. government, often referred to as the "Trump Deal," has created a connection between technology, politics, and finance, raising questions about national security policy and general news.
- The "Trump Deal" has set a precedent in technology and finance, signaling that future export control negotiations may involve revenue-sharing commitments from companies, potentially impacting general news and national security policy discussions.
