Nvidia and AMD Agree to 15% Tariff Deal: What it Means for Semiconductor Giants and Intel

Nvidia and AMD have agreed to a 15% revenue-sharing deal with the US government to secure export licenses for their China chip sales. This unprecedented move raises questions about investment risks and opportunities for these giants, as well as Intel, which could be next in line. Analysts warn of a "slippery slope" if China leans harder on domestic players like Huawei. The deal shakes up the semiconductor landscape and may impact Nvidia's margins and AMD's growth prospects.

Nvidia and AMD have agreed to a groundbreaking 15% revenue-sharing deal with the U.S. government, securing export licenses for their China chip sales [1]. This unprecedented move has significant implications for the semiconductor industry and geopolitical relations between the U.S. and China.

The agreement, brokered by President Donald Trump's administration, requires Nvidia and AMD to remit 15% of their revenues from sales of certain AI chips to China. In exchange, the companies will receive export licenses to sell Nvidia's H20 and AMD's MI308 chips in China [1]. This deal represents a departure from traditional export control policies and has sparked debate about its potential impact on the companies' profitability and the broader semiconductor industry.

Analysts have expressed mixed opinions on the deal's implications. While some view it as a net positive for both companies, others warn of long-term uncertainties. Ben Barringer, global technology analyst at Quilter Cheviot, noted that "from an investor perspective, it's still a net positive, 85% of the revenue is better than zero" [1]. However, George Chen, partner and co-chair of the digital practice at The Asia Group, cautioned that "the question will be whether Nvidia and AMD adjust their prices by 15% to account for the levy" [1].

The deal has raised concerns about the precedent it sets for other companies and industries. Neil Shah, partner at Counterpoint Research, described the revenue cut as an "indirect tariff at source" and suggested that such deals are unlikely to extend to other sectors like software and services [1]. This uncertainty highlights the potential for a "slippery slope," where China may lean harder on domestic players like Huawei if similar deals are struck with other U.S. companies.

The impact on Nvidia's and AMD's margins and growth prospects remains uncertain. While the deal allows them to re-enter the lucrative Chinese market, the direct cut to their top line has sparked investor apprehension. Shares of both companies closed moderately lower on Monday following the announcement [1]. This reaction underscores the investor concern over the precedent set by the revenue-sharing model and its potential long-term impact on future profitability.

The deal also has geopolitical implications. China has raised concerns about the security of Nvidia's chips and the potential for "backdoors" that could be exploited for national security purposes [1]. The U.S. government's move to secure a revenue share from these sales has stirred mixed feelings in China, with the Chinese government yet to comment on the reported revenue agreement.

In conclusion, Nvidia and AMD's 15% revenue-sharing deal with the U.S. government represents a significant shift in the semiconductor landscape and geopolitical relations. While the deal allows these companies to re-enter the Chinese market, the long-term implications for their profitability and the broader semiconductor industry remain uncertain. The precedent set by this deal could have far-reaching consequences for other U.S. companies and industries, as well as the geopolitical dynamics between the U.S. and China.

References:

[1] https://www.cnbc.com/2025/08/11/trump-nvidia-amd-china-chip-revenue-deal-implications.html
[2] https://markets.financialcontent.com/stocks/article/marketminute-2025-8-12-us-strikes-unprecedented-chip-deal-nvidia-and-amd-to-share-china-revenue-raising-margin-concerns