NVIDIA and AMD will pay 15% for the right to sell to China in Trump’s AI chip tax — “America cannot repeat 5G and lose telecommunication leadership”

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Recently, there has been a lot of discussion about NVIDIA’s plan to sell its advanced AI graphics processors to China. The U.S. government only recently lifted the ban on selling H20 chips, which occurred on July 14, 2025, about four months after imposing it due to concerns over national security.

On August 10, as reported by Financial Times, it was disclosed that both NVIDIA and AMD have consented to remit 15% of their earnings from selected AI accelerator sales – the NVIDIA H20 and the AMD MI308 – to the U.S. government for sales made to China.

I can’t help but observe that this agreement seems to be completely uncharted territory, if not a bit peculiar. The crux of it lies in the endeavors of NVIDIA and AMD to secure export licenses for their chips, which are issued by the US government.

Both NVIDIA and AMD perceive a highly profitable chance in the vast Chinese market for their artificial intelligence (AI) chips. The inability to sell these chips to this significant market could potentially erase billions from their earnings.

According to the Financial Times article, those particular export permits were given out last week and their distribution started on Friday, roughly two days following a face-to-face meeting between NVIDIA’s CEO, Jensen Huang, and President Trump.

It seems that the 15% tax rate emerged as the last detail agreed upon during negotiations between the two prominent companies and U.S. government representatives.

US President Trump makes statements about the new AMD/NVIDIA AI chip deal

On Monday, U.S. President Trump convened a press event to endorse the fresh agreement with NVIDIA and AMD. According to Reuters, Trump reiterated his stance that the H20 doesn’t possess sufficient power to bring about substantial change.

The water supply is outdated… So I told him, ‘Look, I’ll agree to support this, but only if I receive a 20% share of it, for the nation’s benefit.’

US President Donald Trump

It appears the final agreement reduces the percentage both NVIDIA and AMD owe to a mere 15%. Yet, it’s worth noting that the NVIDIA H20 AI GPU, though a scaled-back version compared to the Hopper-based H200 AI chips, remains an incredibly powerful hardware solution.

What could possibly be causing such a surge in Chinese orders for NVIDIA’s H20 AI chips? As I mentioned back on July 30th, NVIDIA requires an additional 300,000 of these chips from TSMC to fulfill the high demand from China, on top of the existing stockpile of 600,000 to 700,000 chips waiting for customers.

During the press conference, Trump likewise made remarks about the innovative NVIDIA B200 chip, which is built upon the most recent Blackwell architecture.

Jensen now possesses the updated chip, dubbed Blackwell, albeit a slightly diminished variant. You could say it’s been reduced by 30% to 50%. I suspect he’ll visit me again regarding this, but it will be the standard version of the major one.

It appears that this agreement could potentially serve as a recurring pattern. NVIDIA, when asked for clarification, has consistently used familiar statements without providing much new insight.

We adhere to regulations established by the U.S. government regarding our involvement in global markets. For several months now, we have not exported H2O to China. However, we are optimistic that export control rules will enable us to compete effectively, not only in China but also worldwide. The United States cannot afford another situation like 5G where leadership was lost. America’s advanced AI technology has the potential to become a global standard if we engage in a competitive race.

NVIDIA

It’s significant to note that such a transaction is unprecedented. However, considering President Trump’s recent initiatives to stimulate domestic investment from major tech companies, either through tariffs or production contracts, it becomes clearer.

US officials are concerned about the new deal

Could this agreement be against the law? I’m not completely certain, but it seems that under the U.S. Constitution, Congress cannot impose taxes or fees on products exported from any state. Yet, it appears there might be a way for the government to get around this rule.

Additionally, there are national security considerations that appear less significant given the current arrangement where the U.S. government receives a commission from these sales.

U.S. Representative Raja Krishnamoorthi, who holds the top position in the House Select Committee overseeing the strategic rivalry between the United States and the Communist Party of China, issued a statement in response to the recently announced 15% trade agreement.

The alleged arrangement between Nvidia and AMD, where they would give 15% of their earnings from chip sales in China to receive export licenses from the U.S. government, could potentially misuse export regulations and harm our national security. Export controls are designed to protect the United States, not to generate income. If the sale of advanced semiconductors to China poses the national security threats we’ve frequently mentioned, they should be banned, not exploited through a profit-sharing scheme with the government that lacks transparency.

The setup necessitates urgent responses from the administration on several key points. For instance, they need to clarify their legal basis for demanding revenue-sharing as a prerequisite for export licenses, explain how these funds will be managed, assure that the referral process set by Congress was adhered to, and confirm if there were any consultations with Congress throughout the development of this system.

What causes concern is the inconsistency in this proposed policy. The government can’t view semiconductor exports as both a potential danger to national security and a source of income at the same time. If we set prices on our security concerns, it may appear to China and our allies that American national security values can be bought.

It’ll certainly be intriguing to watch the developments unfold and determine if the recently introduced 15% bonus for specific NVIDIA and AMD AI processors is going to persist over time.

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2025-08-16 19:55