Nvidia and AMD have reportedly agreed to pay the U.S. government a 15% cut of their revenue from their specialized chip sales in China, in a deal so unconventional the business world is still reeling.

The arrangement, effectively a new kind of “export tax,” is an unprecedented move that ends a months-long blockade and reopens one of the world’s largest markets for America’s two most valuable chipmakers.

The news, first reported by the Financial Times, reveals the original and transactional tactics the Trump administration is deploying to generate revenue and control the flow of strategic technology. Nvidia and AMD chips are highly sought after by companies and governments to train their AI tools in the current AI race.

Why They Agreed to Pay

For Nvidia and AMD, agreeing to pay the government a portion of their profits was the lesser of two evils. Being completely locked out of the Chinese market was a financial catastrophe.

Nvidia had been hit particularly hard. After the administration blocked its China-specific chips in April, the company was forced to take a $4.5 billion charge for excess inventory it could no longer sell.

In May, it warned investors that the restrictions would cost the company an estimated $8 billion in revenue for the full fiscal year. Faced with losing billions, handing over 15% of future sales was a price they were willing to pay.

How We Got Here

The standoff is the latest chapter in the long-running U.S.-China tech war. The U.S. government has been trying to slow Beijing’s military advancement by blocking its access to high-end AI chips.

After the previous administration banned the sale of their most powerful processors, Nvidia and AMD cleverly designed special, less-powerful “compliance chips” — like Nvidia’s H2O and AMD’s MI308 — specifically for the Chinese market.

But in April, the Trump administration tightened the screws, requiring a special license to sell even these less powerful chips. That move triggered months of intense, high-stakes lobbying, marked by several White House visits from Nvidia CEO Jensen Huang, which ultimately led to this new arrangement.

For the Trump administration, the deal is a win on multiple fronts. It provides a new stream of federal revenue that could help finance the massive tax cuts in the “One Big Beautiful Bill,” the president’s signature legislation.

It also allows the administration to look tough on China while simultaneously protecting the financial health of critical American companies.

In a carefully worded statement to Gizmodo, an Nvidia spokesperson avoided confirming the 15% figure but acknowledged the new reality.

“We follow rules the U.S. government sets for our participation in worldwide markets,” it reads. “While we haven’t shipped H2O to China for months, we hope export control rules will let America compete in China and worldwide.”

The spokesperson added: “America cannot repeat 5G and lose telecommunications leadership. America’s AI tech stack can be the world’s standard if we race.”

This new deal is a radical departure from traditional trade policy.

Governments typically encourage and subsidize exports from their national champions to boost trade balances. This new model, however, forces America’s most successful companies to pay for the privilege of competing abroad.

It’s a pragmatic compromise that gives Nvidia a path to reclaim its dominant market position and potentially push its market value past the unprecedented $5 trillion threshold. But it also sets a startling precedent for how the U.S. government could exert control over its most strategic industries in the future.

AMD did not immediately respond to a request for comment.