President Trump just brokered a blockbuster - and unprecedented - deal with two of the biggest names in AI chips: Nvidia and AMD. Here’s the skinny:
Both companies have agreed to pay 15% of their Chinese AI-chip revenue to the U.S. government - as a condition for winning back export licenses. That’s 15% of any H20 (Nvidia) or MI308 (AMD) sales in China flowing straight to Washington.
This arrangement is totally new territory - export controls have always been about national security, not revenue. Experts are screaming “unprecedented” and possibly unconstitutional taxation.
Here’s how it went down:
Back in April, Trump’s administration halted sales of Nvidia’s H20 chips to China.
Fast forward to July: Nvidia’s CEO met with Trump, and suddenly the U.S. Commerce Department starts approving exports again - but only if the companies share a hefty slice of their sales.
Analysts warn that this revenue-sharing could slash profit margins—by 5 to 15 percentage points on those China chip sales.
The market didn’t love it (at first): Nvidia dropped 1% and AMD slid 2% in premarket trade following the news. But, by midday, both stocks were trading higher and Nvidia was near a new all-time high.
Investor Takeaway
If you’re invested the AI chip sector, this is your wake-up call - and your green light. Political risk is real, but it’s not a reason to run. In fact, the fact that Washington is cutting deals to get chips flowing into China again proves just how critical Nvidia, AMD, and the entire AI supply chain have become to the global economy.
Yes, the 15% revenue share takes a bite, but it’s a small price for re-entry into one of the largest markets in the world. Long term, demand for AI chips will keep exploding - and the companies building them will remain at the center of one of the biggest tech booms in history.
Diversification is smart, but don’t sleep on this space. If anything, moments like this are when the next leg higher begins.
Political noise comes and goes - but transformative tech megatrends like AI rewrite the future, and that’s where the real money is made.
Here’s to the future,
Matt McCall
Editor, Market Insights
