U.S. Government to Receive 15% Cut from Nvidia and AMD China AI Chip Sales

Washington D.C. – The Trump administration has finalized an unprecedented agreement allowing Nvidia and Advanced Micro Devices (AMD) to resume exporting certain artificial intelligence (AI) chips to China, on the condition that 15% of the sales revenue be remitted to the U.S. government. This policy reversal, coming after an April ban on such exports, has ignited sharp criticism from national security experts who warn it could bolster China's military AI capabilities. The deal, which includes Nvidia's H20 chip and AMD's MI308, is projected to generate billions in revenue, with an estimated $23 billion from Nvidia's H20 sales alone in 2025.

The controversial decision follows intense lobbying efforts by chipmakers, notably Nvidia CEO Jensen Huang, who met with President Donald Trump. While the administration asserts these chips are not the most advanced, this arrangement marks a significant departure from traditional export control mechanisms, effectively monetizing what was previously a national security restriction. The Commerce Department began issuing the necessary export licenses shortly after the agreement was reached in early August.

Former Trump administration officials and national security strategists, including Matt Pottinger and Liza D. Tobin, have vehemently opposed the move. Tobin, who previously served as China director at the National Security Council, stated, "Beijing must be gloating to see Washington turn export licenses into revenue streams." She further criticized the decision, saying, "This is the Trump playbook applied in exactly the wrong domain. You’re selling our national security for corporate profits."

Concerns are particularly acute given China's rapid advancements in military AI. As Pottinger and Tobin highlighted in their initial concerns, the Chinese military showcased an "AI-enabled, four-legged terminator unit… with an assault rifle mounted on its back" in April. Reports from exercises like "Golden Dragon 2024" confirm the People's Liberation Army (PLA) is actively integrating rifle-toting robot dogs into its operations, demonstrating a clear intent to leverage advanced AI for military modernization.

The administration defends the policy by arguing that it allows U.S. companies to compete in the Chinese market while ensuring China does not receive the most cutting-edge technology. However, critics argue that even less advanced chips, like the H20, can serve as a "potent accelerator of China’s frontier AI capabilities," potentially narrowing the technological gap between the two nations and fueling China's military-civil fusion strategy. The debate underscores the complex balance between economic interests and national security in the escalating U.S.-China AI race.