U.S. President Donald Trump has ignited controversy by striking a deal with Nvidia to allow sales of certain AI chips to China in exchange for a 15% cut of the company’s revenue from those sales.
The move marks a significant break from decades of U.S. policy on export controls, where restrictions on sensitive technologies were based on national security grounds and considered non-negotiable.
Details of the Agreement
The deal permits Nvidia to sell its H20 chips to China — hardware previously banned by the administration months earlier.
Trump’s arrangement also extends to AMD, Nvidia’s smaller rival, with both companies agreeing to similar terms.
He has indicated he would consider allowing a scaled-down version of Nvidia’s flagship Blackwell chips to be sold to China as well.
Administration officials have downplayed the security risks, with U.S. Commerce Secretary Howard Lutnick describing the H20 as Nvidia’s “fourth-best chip.”
Criticism from Lawmakers
The announcement drew sharp criticism from both Republicans and Democrats.
“Export controls are a frontline defense in protecting our national security, and we should not set a precedent that incentivizes the government to grant licenses to sell China technology that will enhance its AI capabilities,” said Representative John Moolenaar, a Michigan Republican.
Representative Raja Krishnamoorthi, an Illinois Democrat, warned that “by putting a price on our security concerns, we signal to China and our allies that American national security principles are negotiable for the right fee.”
Legal and Economic Questions
Some legal experts have questioned whether the arrangement could be considered an export tax, which the U.S. Constitution prohibits Congress from levying.
“It sure looks like an export tax to me,” said Kyle Handley, a professor at the University of California San Diego.
Trade lawyer Jeremy Iloulian noted that no such payment-for-license structure has been used before.
Nvidia, while not directly confirming the 15% figure, said it “follows rules the U.S. government sets” and hopes export controls will allow America to compete globally.
AMD said it complies with all U.S. export regulations but did not address the revenue-sharing element directly.
Potential Precedent
Analysts have warned the move could open the door to similar deals across other strategic industries.
“It feels like a slippery slope to us,” said Bernstein analysts, who estimated the arrangement could cut Nvidia and AMD’s gross margins on China-bound chips by 5 to 15 percentage points.
Portfolio manager Hendi Susanto said the model could be seen as either a burden or a lifeline for companies seeking to maintain access to the Chinese market.