Nvidia and AMD, two major US chipmakers, have agreed to share 15% of their revenue from selling advanced artificial intelligence (AI) chips to China in order to secure export licenses after a months-long pause. The deal raises constitutional questions and may set a concerning new precedent. Both companies face new restrictions from the Trump administration in April, effectively blocking sales to China. The agreement appears to remove a major impediment for both companies, as Nvidia has incurred $4.5 billion in charges associated with the chip restrictions in the first quarter and expected an $8 billion sales hit in the second quarter. AMD holds a much smaller share of the market, although it remains a key player.
The deal represents a notable shift in how the government approaches export controls, as it turns the export control function of the government into a money-raising proposition. The US government is barred from imposing taxes on exports under both the Constitution and federal law. It is unclear whether the 15% cut from Nvidia and AMD’s revenues would count as an export tax because “it looks like the companies just decided to make this payment in order to further their business,” Hufbauer noted.
The Trump administration’s decision to allow Nvidia to resume H20 sales to China has already been a source of concern among both Democrats and Republicans, who have warned that it could boost Beijing’s AI capabilities. Commerce Secretary Howard Lutnick has argued the administration is only giving China Nvidia’s “fourth best” chip. However, the deals could be a “template” that other companies facing export controls try to follow, as they only would have happened with Trump as president.
