The US government gains a slice of the AI pie as Nvidia and AMD agree to pay 15% of China chip sales in exchange for export licenses.

The US government is capitalizing on the AI boom by negotiating deals with chip companies like Nvidia and AMD, granting them access to the Chinese market in exchange for a 15% cut of sales. This move comes as Nvidia refutes allegations from Chinese state media that its AI chips pose a national security risk. Meanwhile, the US stock market continues to rise, with the Nasdaq Composite closing at a fresh all-time high.

In a significant development, Nvidia and AMD have reportedly agreed to share 15% of their China chip sales with the U.S. government in exchange for export licenses [1]. This move comes after the U.S. Commerce Department began issuing licenses to Nvidia to export its H20 chips to China. The decision to allow Nvidia to resume H20 chip exports to China follows a reversal of an April ban, which had posed a significant challenge for the company, potentially cutting $8 billion from its revenue in the July quarter [1].

Nvidia's CEO, Jensen Huang, met with former U.S. President Donald Trump on Wednesday, which may have influenced the decision to start issuing export licenses [2]. The meeting occurred two days before the Commerce Department began issuing the licenses, according to the Financial Times [2].

Both Nvidia and AMD are now poised to benefit from the reopening of the Chinese market. However, the agreement to share 15% of sales with the U.S. government underscores the strategic importance of the Chinese market for American chipmakers. Despite restrictions, China remains a vital revenue source, accounting for a substantial portion of their sales [1].

Meanwhile, Nvidia has pushed back against allegations from Chinese state media that its H20 chips pose a national security risk. Chinese state media has framed the H20 chip as inferior and dangerous compared to Nvidia's other chips, while the company has defended its chips [3]. Tensions between the U.S. and China on semiconductor export controls have escalated in recent weeks, even after Nvidia resumed sales of its H20 chip to China.

The US stock market continues to rise, with the Nasdaq Composite closing at a fresh all-time high. The S&P 500 Index is once again knocking on the door of a new record high, while the Nasdaq Composite has recently achieved multiple all-time closing highs [4]. The primary catalyst for recent market volatility has been the US administration's aggressive stance on tariffs. Despite this, the market demonstrated remarkable resilience following a pause in tariff increases announced by the Trump administration [4].

References:
[1] https://www.phoneworld.com.pk/breaking-news-us-allows-nvidia-to-resume-h20-chips-export-to-china/
[2] https://www.investing.com/news/stock-market-news/us-licenses-nvidia-to-export-chips-to-china-after-ceo-meets-trump-ft-reports-4181584
[3] https://markets.financialcontent.com/stocks/article/marketminute-2025-8-8-us-stock-market-navigates-mixed-signals-s-and-p-500-nears-record-high-amidst-volatility
[4] https://www.cnbc.com/2025/08/10/nvidia-china-h20-chips.html