• Nvidia and AMD agree to share 15% of China chip sales revenue with the U.S. government under a novel export licensing arrangement.
  • Treasury Secretary Scott Bessent calls the deal a 'unique solution' that could set a template for future tech trade regulation.
  • Legal experts raise concerns about executive overreach as the agreement bypasses congressional approval.

A New Model for Tech Trade

In an unprecedented move, the U.S. government has brokered a 15% revenue-sharing agreement with semiconductor giants Nvidia and AMD, requiring the companies to contribute a portion of their China-based AI chip sales to federal coffers. Treasury Secretary Scott Bessent praised the arrangement as a "special" solution that balances national security concerns with economic interests, though some policy experts immediately questioned its legality.

The deal covers exports of Nvidia's H20 and AMD's MI308 chips—products specifically designed to comply with U.S. national security controls while remaining commercially viable in China. "These are special companies operating in a strategic sector," Bessent said when asked about the arrangement. "This creates a sustainable framework where American innovation can compete globally without compromising security."

Legal and Market Implications

Gary Hufbauer of the Peterson Institute for International Economics called the revenue-sharing mechanism "highly unusual," noting that past administrations typically relied on congressional-approved tariffs or outright bans. The funds will reportedly be directed toward national debt reduction, with the administration considering expanding the model to other industries if successful.

AMD appears more exposed to the new terms than Nvidia, with 24% of its fiscal 2024 sales coming from China compared to Nvidia's roughly $17 billion annual Chinese revenue. Both companies' shares showed muted reaction to the news, suggesting investors had priced in some form of continued China market access.

Uncharted Territory

The agreement marks the first time direct revenue-sharing has been used as an export license condition in U.S. trade history. While administration officials frame it as a pragmatic compromise, congressional staffers from both parties have privately expressed concerns about the precedent. One Senate aide, speaking anonymously, said: "This effectively turns select corporations into tax collectors without the oversight that normally accompanies revenue measures."

As the policy takes effect in August 2025, all eyes will be on whether China accepts the modified chips—and whether other nations adopt similar frameworks for strategic tech trade.