Nvidia, AMD accept 15% U.S. cut on China chip sales

Nvidia and AMD have regained a path to sell tailored AI accelerators in China after Washington approved export licenses tied to a 15% revenue share with the U.S. government. The arrangement follows high-level talks in Washington and applies to Nvidia’s H20 and AMD’s next China-bound parts.

The approval offers immediate relief for supply pipelines disrupted by earlier bans. Yet the deal trims margins and adds policy risk, setting a novel precedent for linking market access to ongoing payments rather than one-off compliance.

How the 15% model works

Under the terms, chipmakers can ship approved accelerators to China while remitting 15% of related revenue to the U.S. Treasury. Licenses are issued through Commerce, with the White House endorsing the framework after direct engagement with industry leaders.

The structure functions like a metered permission system. It gives Washington visibility and leverage over sales volumes while letting suppliers re-enter a critical market without revising core hardware restrictions.

Did you know?
China accounted for more than one quarter of Nvidia’s data center revenue before U.S. export curbs, making it one of the company’s most strategically important markets.

Beijing’s warning complicates the rebound

Days after the U.S. greenlight, Chinese agencies urged companies to avoid Nvidia’s H20 in sensitive or government-linked projects. Regulators cited security concerns, summoning company representatives and pressing buyers on domestic alternatives.

That guidance could curb demand in precisely the segments with the highest purchasing power, even as licenses reopen the channel. It also accelerates substitution toward local accelerators in public-sector and state-adjacent deployments.

Security scrutiny meets industrial policy

Chinese notices framed risks around potential backdoors and remote-disable capabilities, which Nvidia denies. State media amplified skepticism about H20’s security posture, reinforcing a broader shift to reduce reliance on foreign chips in strategic workloads.

For U.S. vendors, the narrative headwind adds to pricing pressure from the 15% skim. It may also lengthen validation cycles as customers weigh compliance, auditability, and future-proofing against policy swings.

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Market math and margin pressure

Analysts had modeled a sizable China recovery once licensing resumed. The 15% skim and procurement caution now pull in opposite directions, squeezing gross margins and potentially lowering unit velocity into sensitive sectors.

Vendors may prioritize configurations optimized for cost-to-performance under the new haircut. Hyperscalers could hedge with split architectures, pairing local accelerators with select imported parts for specific models.

Legal questions around the framework

Policy experts say the arrangement is unusual and could face constitutional scrutiny if construed as a tax on exports. Others note it may instead function as a conditional license fee, complicating traditional legal arguments.

Even if challenges emerge, standing and timing are uncertain. For now, suppliers are likely to treat the skim as a cost of market access while assessing durability across political cycles.

Winners, losers, and watch items

Domestic Chinese chipmakers could gain share in public-sector deals as guidance hardens procurement norms. U.S. firms might fare better with private cloud and research buyers less constrained by security directives.

Key signals ahead include any written expansion of China’s guidance, U.S. clarifications on the scope and duration of the revenue share, and customer architecture pivots that lock in alternatives for multiple hardware cycles.

The strategic picture

The 15% model underscores a move from static export rules to dynamic, transactional control of high-end chip flows. China’s response leverages security narratives to accelerate substitution and pressure U.S. vendors.

Both tactics reshape the economics of AI hardware at scale. The test now is whether predictable licensing and clear procurement rules can anchor investment plans before another policy turn redraws the map.