U.S. Government to Take Cut of Nvidia and AMD A.I. Chip Sales to China

**U.S. The government will reduce AMD and Nvidia's AI budgets. China Chip Sales** The leading semiconductor companies Nvidia and AMD must give China 15% of sales revenue from specific AI products sold in the Chinese market in exchange for permission to export those chips. The chips in question are Nvidia's H20 model and AMD's MI308, both of which are designed to deliver high performance in AI training and inference workloads. These models were previously restricted under U.S. export rules due to concerns that their capabilities could enhance China's artificial intelligence and military technologies. This arrangement marks a significant departure from traditional export control practices The U.S. government halted sales of these chips to China earlier this year, citing national security risks. The freeze put a lot of pressure on both Nvidia and AMD because the Chinese market is so important to their revenue streams. China is one of the biggest consumers of AI hardware in the world, and a long sales ban would have cost billions of dollars. A compromise between the companies and the government allows limited exports but comes with a 15% revenue cut that goes to the U.S. Treasury. Officials argue that permitting some level of controlled exports keeps U.S. technology integrated into Chinese systems, preventing complete reliance on alternative suppliers such as domestic Chinese chipmakers or competitors from other nations. This foothold could in theory preserve long-term influence in the global AI technology ecosystem. Critics, on the other hand, view the decision as contradictory. They argue that if the chips are truly a security risk, then no percentage of revenue should justify allowing their sale. Additionally, the precedent of monetizing access to sensitive For Nvidia alone, Chinese demand for the H20 could reach several billion dollars per year, making the government's cut a substantial source of revenue. AMD's exposure is less certain, but still potentially significant given the growing demand for high-end AI accelerators in China. This revenue may benefit federal coffers, but the lack of clarity over how it will be used has raised transparency concerns among lawmakers and policy experts. Industry analysts have calculated that the 15% levy could result in billions of dollars flowing to the U.S. The ability to reenter the Chinese market and offset the lower profitability of Chinese sales will determine the financial impact on Nvidia and AMD. Stock market reactions have been mixed up to this point, with some shareholders welcoming any return to sales while others worry that the terms of the agreement could serve as a model for future government demands in other markets or industries. Observers speculate that the agreement may be part of a larger negotiation package, possibly involving concessions on rare earth minerals or other strategically important resources. While no formal link has been established, the timing suggests it may be a factor. The agreement comes amid broader U.S. China trade discussions. The decision raises fundamental questions about whether the best way to manage competition with China is through outright restrictions or through controlled engagement that simultaneously serves economic and strategic goals. How this policy plays out will shape not only the balance between these two global powers but also the rules of the game for technology trade in the years ahead. It reflects the increasingly complex intersection of commerce, technology, and geopolitics in the age of artificial intelligence. It underscores how strategic technologies are now both tools of national power and valuable commodities.