Nvidia and AMD Rejoice Amid Trump's Chip Gambit, But Future Uncertain

President Trump has announced a 15% cut of Nvidia and AMD chip sales to Chinese companies in exchange for allowing the AI hardware to flow back into the country. This move appears to be positive for the chip giants, but raises questions about their futures, including whether they will be able to continue selling chips in China and what toll the president will extract from Intel moving forward. Nvidia and AMD had taken significant losses due to a ban on chip shipments to China in April.

In a significant development for the tech sector, Nvidia and AMD have reportedly agreed to share 15% of their Chinese chip sales revenue with the U.S. government. This unprecedented deal aims to bolster domestic chip production in China while maintaining U.S. market access for the companies [1]. According to reports, Nvidia and AMD obtained U.S. export licenses for the Chinese market for their H20 and MI308 artificial-intelligence chips, respectively. However, these licenses come with a condition: the companies must share 15% of their revenue from these chip sales in China with the U.S. government [1].

The agreement, brokered by President Trump, appears to be a strategic move to prevent Huawei from dominating the Chinese AI chip market. It also comes as a relief for Nvidia and AMD, which had taken significant losses due to a ban on chip shipments to China in April. The U.S. government has not yet decided how to use the revenue, but the agreement ensures continued access to the Chinese market for both companies [1].

The impact on Nvidia and AMD’s gross margins is a concern. Analysts warn that the levy could pressure margins by 5 to 15 percentage points on affected products [1]. However, the deal is seen as a positive step by some, who view it as a political tariff in disguise, aiming to maintain U.S. business dominance in AI without giving up the cream-of-the-crop chips to China.

The agreement also raises questions about the future of Intel, which has been backed by Sequoia Capital's Moritz. The CEO of Intel, Pat Gelsinger, has received backing from Sequoia Capital, which believes in Gelsinger's vision for the company. This development is significant in the tech sector, particularly in the chip industry [2].

The deal comes amid ongoing trade negotiations between the U.S. and China, where technology has emerged as a key issue. China’s access to American technology, especially high-end chips that can be used in the development of artificial intelligence, has become a key issue in trade and tech frictions between the rival economies [1].

References:
[1] https://www.cnn.com/2025/08/11/china/us-china-trade-nvidia-chips-intl-hnk
[2] https://www.ainvest.com/news/nvidia-amd-agree-share-15-chinese-chip-sales-revenue-beijing-2508-87/