Nvidia, AMD to Pay 15% of China Chip Sale Income to US, FT Says
Imagine sitting down for your morning coffee and reading a headline that makes you do a double-take: Nvidia Corp. and Advanced Micro Devices Inc., two titans of the semiconductor world, have reportedly agreed to hand over 15% of their revenues from chip sales in China directly to the U.S. government. That's the extraordinary revelation from the Financial Times on Sunday, detailing a stunning quid pro quo from the Trump administration era.
This isn't just a tax; it's a direct share of foreign revenue, a seemingly unprecedented arrangement that allowed these crucial chipmakers to secure the export licenses vital for their continued operations in the massive Chinese market. For a company like Nvidia, which has seen significant growth driven by demand in data centers and AI applications globally—including China—a 15% cut is far from trivial. It speaks volumes about the intense pressure American tech giants face as the U.S. ratchets up efforts to curb China's technological advancement, particularly in critical areas like advanced semiconductors.
The backdrop to this agreement is, of course, the escalating tech rivalry between Washington and Beijing. The Trump administration, known for its aggressive stance on trade and technology, had already begun implementing stringent export control regimes aimed at limiting China's access to cutting-edge chips and manufacturing equipment. For companies whose very existence relies on global supply chains and vast international markets, navigating these restrictions became a high-stakes poker game. Securing those coveted export licenses wasn't just about maintaining market share; it was about ensuring business continuity.
You can imagine the conversations happening behind closed doors. For Nvidia and AMD, both based in California, the Chinese market represents a substantial portion of their revenue, particularly in segments crucial for AI development and high-performance computing. To simply withdraw from China was, and remains, a non-starter for most. So, faced with the choice between losing access to a critical market or accepting a significant financial concession, the latter, however painful, became the pragmatic path forward. It highlights the difficult balancing act these companies are forced to perform, caught between two of the world's largest economies and their competing strategic interests.
What's particularly interesting here isn't just the financial toll, but the sheer political leverage it represents. This kind of arrangement essentially turns private corporate revenue into a direct contribution to U.S. government coffers, tied explicitly to foreign policy objectives. It sets a fascinating, and potentially worrying, precedent for how future export control negotiations might unfold, not just for chips, but for other critical technologies. It also begs the question of transparency: how many other such deals might exist, and what are their long-term implications for global trade and corporate autonomy? The FT's report pulls back a curtain on the hidden costs of the ongoing tech war, revealing a new layer of complexity for businesses operating on this geopolitical chessboard.
