Quick Read
- Nvidia and AMD agreed to share 15% of revenue from specific AI chip sales in China.
- The deal secures export licenses, allowing sales of Nvidia’s H20 and AMD’s MI308 chipsets.
- Both companies’ stock prices declined following the announcement.
- The agreement highlights U.S.-China tech trade tensions and national security concerns.
Nvidia and Advanced Micro Devices (AMD), two of the world’s leading chipmakers, have made headlines with a groundbreaking agreement with the U.S. government. Announced on August 10, 2025, the companies agreed to share 15% of their revenues from specific artificial intelligence (AI) chip sales to China in exchange for securing export licenses. This decision has ignited debates about the implications for global tech trade and the companies’ stock performance.
Details of the Agreement
According to the Financial Times, Nvidia and AMD will transfer 15% of revenues from the sales of Nvidia’s H20 chipset and AMD’s MI308 chipset in China to the U.S. government. This arrangement allows the companies to legally export these high-performance AI chips to the Chinese market, which had been restricted under prior U.S. regulations. Without the export licenses granted through this deal, Nvidia and AMD would have been barred from selling these advanced products to one of their largest markets.
This revenue-sharing deal is unprecedented, as it signifies a new level of U.S. government intervention in the semiconductor industry. A U.S. official cited by Bloomberg emphasized that the agreement balances national security concerns with the economic interests of American tech firms. The export licenses were reportedly issued last week, opening the door for Nvidia and AMD to resume shipments to China.
Stock Market Reaction
The announcement had an immediate effect on the stock prices of both companies. As reported by Investors.com, Nvidia’s stock fell 0.7%, while AMD’s dropped 1.7% during Monday’s premarket trading. These declines came despite Nvidia reaching a record-high stock price earlier in the week. Analysts attribute the dip to investor concerns over the long-term profitability of the revenue-sharing arrangement, as well as broader uncertainties in the U.S.-China trade relationship.
Market indices, including the Dow Jones Industrial Average and Nasdaq, showed slight gains on the same day, suggesting that the broader market was not significantly affected by the news. However, Nvidia and AMD’s performance underscored the sensitivity of the semiconductor sector to geopolitical developments.
Broader Implications for U.S.-China Tech Trade
The deal represents a compromise in the ongoing U.S.-China tech rivalry. The Biden and Trump administrations have both prioritized restricting China’s access to advanced technologies, particularly AI and semiconductor capabilities. The revenue-sharing agreement serves as a middle ground, allowing U.S. companies to maintain a presence in the lucrative Chinese market while addressing national security concerns.
However, critics argue that this sets a concerning precedent. Some industry experts, quoted by Fast Company, worry that such agreements could become a template for future deals, increasing the financial burden on U.S. tech firms. Others caution that the arrangement may not satisfy hardliners in the U.S. government, who advocate for complete decoupling from China’s tech ecosystem.
The Road Ahead
While Nvidia and AMD have secured short-term access to the Chinese market, the long-term outlook remains uncertain. The U.S. government’s focus on safeguarding technological leadership could lead to further restrictions on high-tech exports. Additionally, China may accelerate its efforts to develop domestic semiconductor capabilities, reducing its reliance on U.S. firms.
From an investment perspective, analysts recommend closely monitoring the financial performance of Nvidia and AMD in the coming quarters. The 15% revenue cut will likely impact their profit margins, but the companies’ continued innovation in AI and high-performance computing could offset these losses.
For the broader tech industry, this agreement serves as a reminder of the growing intersection between business strategy and geopolitics. Companies operating in the global market must navigate increasingly complex regulatory landscapes, balancing economic opportunities with compliance and security concerns.
In a rapidly evolving technological and geopolitical environment, the Nvidia-AMD revenue-sharing deal highlights the intricate dynamics at play in the semiconductor industry. As the global tech race intensifies, this agreement may serve as a case study in balancing innovation, commerce, and national security.