Nvidia and AMD have struck a rare arrangement with the US government, agreeing to hand over 15% of revenue from sales of certain AI chips to China in exchange for export licenses. The deal covers Nvidia’s H20 and AMD’s MI308 accelerators, both tailored for China after Washington’s 2023 export restrictions limited access to top-tier GPUs.
The agreement comes amid an intensifying US-China contest over advanced computing hardware, which powers AI models used in everything from language processing to military simulations. The US has argued that high-performance GPUs can give Beijing an edge in strategic projects, including autonomous weapons and mass-surveillance platforms, and has sought to slow China’s access to them through strict export controls.
Deal keeps China market open but sparks security concerns
By accepting the revenue-sharing terms, Nvidia and AMD retain a foothold in one of their most important markets while remaining formally compliant with US rules. Critics, however, say the compromise undermines the point of those rules. Christopher Padilla, a former US export control official, called the arrangement “bribery or blackmail, or both,” warning that it risks weakening the policy’s deterrent value.
The White House has not publicly commented, but the deal was approved under the Trump administration. Its structure is unusual: rather than banning specific products outright, it monetizes their sale to a strategic competitor, raising questions about whether security priorities are being traded for fiscal gain.
Nvidia, for its part, insists it is operating within government guidelines. “We follow the rules the US government sets for our participation in worldwide markets,” the company said in a statement. CEO Jensen Huang has framed the issue in terms of global competitiveness, arguing that “America cannot repeat 5G and lose telecommunication leadership” and that US-developed AI could set the world standard if it moves fast enough.
National security analysts remain divided on whether chips like the H20, engineered with performance caps to meet US requirements, can still advance Chinese defense capabilities. Some argue even downgraded accelerators are powerful enough for large-scale AI training, narrowing the intended gap between US and Chinese computing capacity.
For now, the revenue-sharing deal buys both companies time in a market they cannot afford to lose, while giving Washington a measure of control over what gets shipped. But it also exposes the fragility of export control regimes when commercial interests collide with national security aims. If this revenue-sharing model spreads to other sectors, the line between protecting critical technologies and monetizing their sale to strategic competitors could become increasingly blurred.
In related news, we recently covered a story on China quietly achieving 5nm production without EUV technology, exploring how SMIC bypassed chip sanctions through engineering ingenuity.
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