US Government to Receive 15% of Nvidia and AMD's China Chip Revenues

The US government is set to receive 15% of Nvidia and AMD's China chip revenues, according to reports. This move aims to comply with the US government's requirements for foreign investment in sensitive technologies. The deal is expected to be finalized soon, with details of the agreement remaining unclear. The partnership is seen as a significant step in addressing concerns about the potential risks of Chinese investments in sensitive technologies.

In a significant development, the US government is set to receive 15% of revenues from certain chip sales to China by Nvidia and AMD. This agreement, reported by the Financial Times, is part of a broader effort to manage foreign investment in sensitive technologies. The deal is expected to be finalized soon, with details of the agreement still unclear.

The agreement follows months of restrictions on the sale of advanced computer chips to China. Nvidia and AMD have been granted export licenses for high-end semiconductors, such as Nvidia's H20 and AMD's MI308, which are used in artificial intelligence applications. These chips are crucial for the development of AI technologies, a sector of growing importance globally.

Nvidia generated $17 billion in revenue from China in the latest financial year, accounting for 13% of total sales, while AMD reported $6.2 billion from China in 2024, representing 24% of its revenue. Both companies rely heavily on the Chinese market for their products. A spokesperson for Nvidia stated that the company follows the rules set by the US government for its participation in worldwide markets.

The US Commerce Secretary has previously described the H20 chip as Nvidia's 'fourth-best chip' and has emphasized the importance of Chinese companies using US technology. The agreement is seen as a way to ensure that the US remains competitive in the global market while addressing potential national security concerns.

The details of how the 15% revenue-sharing arrangement will be implemented, including when it will begin and how the funds will be collected and used, remain to be determined. The move is part of broader negotiations with China, including securing supplies of rare earth minerals.

This agreement is notable as it marks the first known case of US firms paying a revenue share for export approval. It highlights the evolving landscape of foreign investment regimes and the increasing scrutiny of investments in sensitive technologies.

References:
[1] https://www.outlookbusiness.com/corporate/nvidia-amd-agree-to-pay-15-of-china-chip-sales-to-us-government
[2] https://www.americanbar.org/groups/antitrust_law/resources/newsletters/navigating-foreign-investment-reviews-remedies/