Nvidia & AMD Forced to Surrender 15% of China Chip Profits to US—Tech Cold War Escalates

Silicon giants Nvidia and AMD just got a mandatory pay cut—straight to Uncle Sam's pockets. Washington's latest power play? Skimming 15% off their China chip revenues. No loopholes, no negotiations.

Geopolitics meets quarterly earnings

The move redefines 'taxation without representation' for multinational tech firms. Both companies now face a brutal calculus: absorb the profit hit or risk losing the world's largest semiconductor market. Shareholders won't be sending thank-you notes.

Wall Street's reaction? A collective shrug—because nothing says 'stable investment' like revenue streams held hostage by trade wars. Meanwhile, Beijing's probably drafting retaliatory measures over whiskey and AI export controls.

Officials approve licences after high-level talks

The road to the agreement was complex. In April, the Trump administration said it would block H20 exports to China, citing concerns about AI technology transfer. The chip had already been designed to fit within Biden-era export limits on high-end AI processors.

In June, Nvidia CEO Jensen Huang met President Donald Trump at the WHITE House. Within days, the administration reversed its decision to block the H20. Even then, the Bureau of Industry and Security (BIS), which enforces export controls, withheld licences for weeks.

These were issued only last week — after the 15% revenue deal was finalised. AMD’s MI308 chip received approval under the same terms.

Industry sources say the deal reflects Trump’s preference for transactional outcomes, blending trade, security, and economic policy.

Security concerns clash with corporate strategy

The arrangement has sparked sharp criticism from national security experts, and in a letter to Commerce Secretary Howard Lutnick, former deputy national security adviser Matt Pottinger and 19 other officials urged the government not to issue H20 licences. They warned that the chip is a “potent accelerator” for China’s AI development and could ultimately aid its military.

Some BIS officials reportedly shared these concerns, fearing the decision could weaken U.S. leadership in artificial intelligence. Nvidia rejected these claims, calling them “misguided” and insisting the H20 is unsuitable for military use. The company has argued that engaging in the Chinese market is crucial to maintaining U.S. technological competitiveness, warning against a repeat of the U.S. loss in the 5G race.

The deal also came as Washington and Beijing held delicate trade talks. China is pressing the U.S. to relax export controls on high-bandwidth memory chips, a key component for advanced AI processors. Trump hopes these negotiations will pave the way for a summit with Chinese President Xi Jinping later this year.

The revenue-sharing agreement now sits at the intersection of geopolitics, security, and corporate strategy. While it grants U.S. companies access to a lucrative market, it also opens a new chapter in how Washington uses export policy to restrict technology and generate revenue from it.

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