NVIDIA and AMD Must Contribute 15% of Limited GPU Sales to China for US License Approval, According to Report

This article does not constitute investment advice, and the author holds no positions in any stocks mentioned.

According to a recent report from Financial Times, NVIDIA and AMD have agreed to pay 15% of their revenue from artificial intelligence graphics processing unit (AI GPU) sales in China to the US government. This arrangement is tied to their licenses for exporting AI GPUs to China and follows a reprieve granted by the US government last July, which allowed for the processing of their sales licenses.

The agreement emerges in the context of both companies facing declines in revenue due to restrictions on sales in China. Reports indicate that the revenue covered under this arrangement includes NVIDIA’s H20 GPUs and AMD’s MI308 AI accelerators, which have become integral to the firms’ operations.

NVIDIA Licenses and Market Impact

On a recent Friday, sources within the government confirmed that NVIDIA had started to receive its export licenses. This news surfaced shortly after AMD’s CEO disclosed in an interview that her company had not yet received similar approvals. AMD has acknowledged a significant drop in its operating income in its latest fiscal report, partially due to decreased sales in China. The current status of AMD’s licensing applications remains unclear while NVIDIA has already seen steps forward in this area.

Prior to the restrictions, NVIDIA reported an impressive $4.6 billion in revenue from its H20 chips in the first quarter, with China representing approximately 12.5% of total sales. Following the earnings announcement in May, NVIDIA’s shares rebounded as the impact of the sales restrictions was less severe than anticipated—$1 billion lower than projections.

Valuation and Future Prospects

The soaring global demand for NVIDIA’s AI products, alongside optimistic analyst forecasts about AI’s future growth, has propelled the company’s stock to unprecedented levels in 2025. This resurgence has restored NVIDIA’s status as the world’s most valuable company, rebounding from the significant downturn following the DeepSeek selloff in January.

NVIDIA graphics processing unit with intricate design and metallic components on a dark background.

US Government Revenue from GPU Sales

The 15% revenue share from NVIDIA’s sales could potentially generate over $2 billion for the US government from Chinese chip sales alone in 2025. The rationale behind this revenue collection might hinge on utilizing the funds to address the US trade deficit, especially as tariffs continue to be a pressing issue in trade negotiations.

While AMD has yet to provide comment on the Financial Times report, NVIDIA has acknowledged its compliance with the regulations established by the US government for international trade. It is possible the Trump administration may direct the revenue from these sales to bolster the American semiconductor manufacturing sector.

Broader US-China Trade Dynamics

Discussions surrounding AI GPUs have intensified within the context of US-China trade relations, particularly as China expresses a strong interest in lifting existing export restrictions. Recent insights reveal Beijing’s pursuit of advanced high bandwidth memory (HBM) chips, which also face US regulations because of American technological input in their design and manufacture. Notably, HBM chips are vital components in AI GPUs; thus, any future chips not authorized for sale to China that incorporate HBM will inherently be restricted.

Source & Images