“Pay to Play” in China? NVIDIA and AMD to Hand Over 15% Chip Revenue to Buy Export Licenses

TradingKey - Beyond the “investment-for-tariff” model, the U.S. government has introduced a new and unprecedented trade tactic: requiring American tech giants to hand over a percentage of their foreign sales revenue in exchange for export licenses. This “pay-to-play” scheme — described by some as “legalized confiscation” — marks a bold escalation in U.S. trade policy, aligning with President Donald Trump’s aggressive “America First” agenda.

According to a report by the Financial Times on August 11, two of America’s leading AI chipmakers — Nvidia (NVDA) and AMD (AMD) — have agreed to remit 15% of their chip sales revenue from China to the U.S. government in exchange for renewed semiconductor export licenses.

A New Kind of Trade Deal

Sources familiar with the negotiations revealed:

• Nvidia will pay 15% of its revenue from sales of the H20 AI chip in China
• AMD will pay the same percentage on its MI308 chip sales in the Chinese market

This arrangement is not a tax or tariff — it’s a direct revenue share with the U.S. government, effectively treating export rights as a negotiable commodity.

The Cost of Access

Bernstein Research estimates that Nvidia is expected to sell around 1.5mn H20 chips to China in 2025, generating approximately $23 billion in revenue. At a 15% rate, that would mean over $3 million in payments to the U.S. Treasury — just from Nvidia.

AMD’s payments would depend on MI308 sales volume, which remains uncertain but could add hundreds of millions more.

From Export Ban to Conditional Access

In April 2025, the Trump administration tightened export controls on advanced AI chips to China, citing national security concerns. That move severely restricted Nvidia and AMD from selling their most competitive AI chips in the world’s largest semiconductor import market.

However, after recent U.S.-China trade talks — where China leveraged its control over rare earth supplies — the U.S. reversed course:

• Nvidia was allowed to resume H20 chip sales to China
• AMD would receive approval to ship MI308 chips after a license review by the Commerce Department

But access came at a price: a 15% revenue cut to Washington.

A Dangerous Precedent?

While the U.S. did not formally loosen its export control rules, this company-by-company deal-making sets a troubling precedent.

Bloomberg noted that the arrangement could unsettle both U.S. corporations and foreign governments, blurring the line between national security policy and fiscal extraction.

Experts warn that this undermines the credibility of U.S. export controls:

“Allies may not believe U.S. policymakers if they are willing to trade away those same national security concerns for economic concessions — either from U.S. companies or foreign governments.”

A New Era of Trade Wars

Analysts say this marks the beginning of a new phase in the U.S.-China tech war — one where trade policy is increasingly transactional and personalized, with the White House negotiating bilateral deals with individual corporations.

Union Bancaire Privée (UBP) in Singapore suggested Trump’s motive is clear: debt relief.

“The US government clearly needs the money given its deficits and eagerness to collect tariffs.”

Strategic Risks for the U.S.

Vantage Markets analysts warned that while the short-term gain is clear, the long-term consequences could favor China:

• Barriers to entry in China’s AI market may limit Nvidia and AMD’s growth
• Meanwhile, Chinese chipmakers like Huawei’s HiSilicon and Cambricon gain valuable time and market space to innovate and scale
• Over time, this could accelerate China’s semiconductor self-reliance

In May 2025, Nvidia CEO Jensen Huang told attendees at Computex that the U.S. export restrictions had already backfired: Nvidia’s market share in China has dropped from 95% under the Biden administration to around 50%.

Huang estimated that China’s AI market alone could be worth $50 billion by 2026 — a massive opportunity that U.S. chipmakers are now being forced to share with the U.S. Treasury just to participate.