Chip Titans in a Trump Era: Nvidia and AMD's China Exposure and Strategic Resilience

The U.S.-China trade war has reshaped the semiconductor industry, forcing companies to balance geopolitical risks with market opportunities. Among the most critical players are NVIDIA and Advanced Micro Devices (AMD), whose contrasting strategies for navigating China's market—and the Trump administration's export controls—offer valuable insights for investors.

The China Revenue Dilemma

In Q2 2025, NVIDIA faced a $8 billion revenue loss in China due to U.S. export restrictions on its H20 AI chip. The Trump administration's April 2025 policy expansion left the company with no sales of this critical product in the region, compounding a $4.5 billion charge from Q1 for unsold inventory. By contrast, AMD's exposure to China is smaller but no less strategic: its MI308 chip could generate $3–$5 billion in 2025 if restrictions are fully lifted. Both companies now operate under a novel 15% revenue-sharing agreement with the U.S. government, effectively ceding a portion of their China-derived profits in exchange for export licenses.

For NVIDIA, the 15% cut is a manageable cost. In Q3 2025, the company expects to recoup $9 billion in H20 sales, with the U.S. government receiving $1.35 billion—a mere 2.9% of its Q1 2025 total revenue of $44.1 billion. AMD's potential $450 million to $750 million payment, while significant, represents a larger margin hit given its smaller scale.

Long-Term Strategic Resilience

The real differentiator between the two lies in their long-term strategies to mitigate China exposure and secure future growth.

NVIDIA has invested $25 billion in R&D for next-generation AI and quantum computing, positioning itself as the backbone of global AI infrastructure. Its supply chain diversification—bolstered by the CHIPS and Science Act and partnerships with U.S. firms like Applied Materials—reduces reliance on China. Additionally, NVIDIA has secured $825 million in government funding through the National Semiconductor Technology Center (NSTC), accelerating advanced node development.

The company's geopolitical agility is equally notable. CEO Jensen Huang's 2025 visits to Beijing and Shanghai underscore NVIDIA's commitment to maintaining a foothold in China despite restrictions. Meanwhile, its “sovereign AI” strategy—partnering with nations in Europe, the Middle East, and Asia to build localized AI ecosystems—creates deep technical dependencies on its full-stack solutions. This approach not only diversifies revenue streams but also insulates NVIDIA from U.S.-China tensions.

AMD, while less exposed to China, faces unique challenges. Its 15% revenue-sharing deal, while allowing access to the Chinese market, introduces legal and geopolitical risks. Critics argue the arrangement could erode the credibility of U.S. export controls or set a precedent for future demands. AMD's smaller China market share (13–24% of lost revenue regained) means its margin pressures are more acute, and its ability to compete with Chinese alternatives like Huawei's Ascend chips remains uncertain.

Investment Implications

For investors, the key takeaway is clear: NVIDIA's strategic depth and global partnerships make it the more resilient player in a Trump-era trade-war environment. Its R&D focus, supply chain diversification, and sovereign AI initiatives position it to dominate the $1.5 trillion AI infrastructure market, which is projected to grow at 35% annually through 2030.

AMD, while benefiting from the 15% deal, must navigate margin pressures and geopolitical uncertainties. Its smaller China exposure reduces immediate risk but also limits upside potential. Investors should monitor AMD's ability to scale MI308 production and its pricing strategies in the face of U.S. revenue-sharing obligations.

The Road Ahead

The Trump administration's transactional approach to trade—exemplified by the 15% revenue-sharing model—signals a shift toward quid pro quo agreements. For NVIDIA, this aligns with its broader strategy of balancing U.S. compliance with global market access. For AMD, the challenge will be maintaining profitability while navigating a regulatory landscape that prioritizes U.S. economic interests over traditional export control norms.

In conclusion, NVIDIA's long-term resilience and strategic foresight make it a stronger bet for investors seeking exposure to the AI-driven semiconductor sector. AMD, while a solid performer, carries higher margin and geopolitical risks that warrant closer scrutiny. As the U.S.-China tech rivalry intensifies, the company that best balances innovation, compliance, and global market access will emerge as the true winner.