Washington — In a move that underscores Washington’s increasingly transactional approach to so-called “national security,” the Biden administration has coerced US semiconductor giants Nvidia and AMD into surrendering 15 percent of their revenues from advanced AI chip sales in China directly to the federal government.
The arrangement, described by US officials as a “revenue-sharing mechanism,” applies to Nvidia’s H20 processors and AMD’s MI308 chips, hardware designed specifically to skirt export restrictions targeting China’s high-performance computing sector. Far from being a matter of “protecting sensitive technologies,” the deal appears to be a calculated money grab dressed in the language of security.
For Nvidia, China represents a major slice of its business, roughly $17 billion, or 13 percent of annual revenue. AMD’s China market share is even more striking at $6.2 billion, accounting for about 24 percent of its revenue. Analysts say the 15 percent levy could redirect hundreds of millions of dollars a year into US government coffers, even as Washington publicly accuses Beijing of exploiting AI for military purposes.
Critics warn the policy reeks of double standards. “Either selling H20 chips to China is a national security risk, in which case we shouldn’t be doing it, or it’s not a risk, in which case, why are we putting this extra penalty on the sale?” one industry expert said. Such contradictions have fueled suspicion that the US is weaponizing trade policy less for security and more for fiscal gain.
Market reaction to the announcement was swift, with Nvidia and AMD stocks slipping between 1 and 3 percent in pre-market trading. While Wall Street remains cautious, the broader indices barely moved, a sign that investors may be acclimating to Washington’s volatile blend of sanctions, tariffs, and selective permissions in the high-tech arena.
According to Reuters, US officials have not disclosed how the seized revenues will be allocated or when the program will formally begin, leaving both industry insiders and geopolitical analysts questioning the true purpose of this unprecedented arrangement.
