Trump administration permits Nvidia and AMD to sell AI chips to China in exchange for 15% revenue share

The Trump administration’s recent decision to permit Nvidia and AMD to sell their advanced AI chips to China in exchange for a 15% cut of their revenue has reshaped the export control landscape, signaling a shift from a rigid, strategic approach to one that functions more like a transactional bargaining chip [1]. The deal, involving Nvidia’s H20 and AMD’s MI308 chips, was announced after Trump confirmed media reports of the agreement during a press conference [1]. This arrangement, which allows U.S. firms to access the Chinese market while generating government revenue, reflects a broader willingness to use export controls as part of trade negotiations [1].

This move marks a departure from the Biden administration’s approach, which positioned export controls as a national security tool aimed at maintaining U.S. technological superiority. Trump, however, appears to treat the controls as part of a broader economic strategy. U.S. Treasury Secretary Scott Bessent described the agreement as a beta test that could be expanded to other products and industries [1]. The decision has sparked criticism from lawmakers on both sides of the aisle, with Republican John Moolenar and Democrat Raja Krishnamoorthi warning that it sets a dangerous precedent by suggesting that U.S. security concerns can be monetized [1].

The deal also highlights Washington’s growing uncertainty in its tech rivalry with Beijing. Analysts note that the U.S. lead in AI and semiconductors is shrinking, estimated at just one to two years [1]. China, in turn, has begun using export controls of its own, particularly through its control of rare earth metals, to pressure U.S. and European industries [1]. This reciprocal strategy has led to a more fluid export control system, with Washington scaling back restrictions on chip design software and airplane parts as part of its trade negotiations with China [1].

Despite these shifts, the effectiveness of export controls in curbing China’s technological development remains unclear. Chinese tech firms like Huawei have continued to innovate, developing their own AI processors in partnership with companies like SMIC [1]. While Huawei’s chips still lag behind those of Nvidia, they offer a viable alternative for the Chinese market. This has forced the U.S. into a difficult position: whether to maintain strict controls to preserve its short-term advantage or to relax them in order to retain market access [1].

U.S. officials, including Commerce Secretary Howard Lutnick, argue that it is in the U.S. interest for Chinese developers to remain dependent on American technology. “You want to sell the Chinese enough that their developers get addicted to the American technology stack,” Lutnick said [1]. The administration also fears that if China establishes a dominant position in AI infrastructure through its digital Belt and Road strategy, it could set global standards that challenge U.S. influence [1].

Backlash to the deal has already begun, with experts like Chris Miller warning that political considerations, rather than strategic calculations, are now driving export control decisions [1]. The erosion of a consistent policy framework could undermine the integrity of the export control system, argues Jennifer Lind, an associate professor at Dartmouth University [1].

On the Chinese side, the reaction has been mixed. While state media has criticized the H20 as environmentally unfriendly and unsafe, private sector demand for the chips remains strong [1]. Researchers like Ray Wang from the Futurum Group suggest that Chinese tech firms will continue to use U.S. chips for AI development, even in the face of government warnings [1]. Nvidia, for its part, has denied that its chips include location-tracking features or security risks, responding to concerns raised by Chinese regulators [1].

The Nvidia-AMD deal reflects a broader transformation in Washington’s approach to export controls, shifting from a strategic, long-term focus to a more transactional and politically driven model [1]. Whether this marks a temporary shift or a new norm in U.S.-China tech relations remains to be seen.

Source: [1] U.S.-China chip war: How Trump’s Nvidia-AMD deal has redefined Washington’s export control policy (https://fortune.com/asia/2025/08/14/us-china-trump-revenue-share-export-controls-nvidia-amd/)