A hot potato: The White House struck an unprecedented deal with Nvidia and AMD, letting the companies resume AI chip exports to China in exchange for a revenue share. The move signals a sharp shift in US export policy and has sparked concerns that national security decisions could become a "pay-for-play" exercise.
Earlier this week, the White House confirmed that US semiconductor giants Nvidia and AMD will pay 15 percent of their revenues from sales of certain advanced chips to China directly to the US government. Reuters reports the unprecedented agreement, brokered by President Donald Trump, clears the way for the companies to resume exports of previously banned AI processors to China, marking a sharp departure from decades of American export control policy.
The announcement has already sparked discussion within the administration about whether similar arrangements could apply to other chipmakers.
"It stands with these two companies; perhaps it could expand in the future to other companies," Press Secretary Karoline Leavitt said during a briefing. "I think it's a creative idea and solution."
Previous administrations treated export rules for sensitive technologies as non-negotiable, designed to shield national security from commercial pressure. Companies trying to sell advanced semiconductors to China rarely saw flexibility, regardless of the commercial cost. Now, President Trump's deal with Nvidia and AMD introduces what many lawmakers and analysts call a "pay-for-play" framework, where negotiations and financial concessions could increasingly shape licensing decisions.
The administration's change of course has set off a wave of reactions from Congress, industry experts, and legal scholars. Observers are raising questions not only about the motivations behind the deal, but also about the long-term implications for how American firms will compete and how much national security policy can – and should – bend to market forces.
President Trump has defended the agreement, saying that allowing Nvidia and AMD to resume exports in exchange for a share of revenue creates "a deal that would benefit the nation." He also indicated openness to letting Nvidia sell scaled-down versions of its top-tier Blackwell chips to China and suggested that similar arrangements could extend to other semiconductor firms.
The administration blocked sales of Nvidia's H20 chip and AMD's MI308 chip earlier this year on national security grounds. It reversed course in July after negotiations reportedly tied to broader discussions on rare earth minerals and trade, allowing the companies to resume exports.
The new approach has drawn sharp criticism from members of Congress in both parties. Representative John Moolenaar of Michigan, the Republican chair of the House Select Committee on China, told Reuters that export controls are a critical national security defense, warning that granting licenses for revenue could set a dangerous precedent. Representative Raja Krishnamoorthi of Illinois, the committee's ranking Democrat, added that putting a monetary value on security would signal to China and US allies that policymakers might negotiate these principles for a fee.
Administration officials said they believe security risks from allowing sales of Nvidia's H20 chip are minimal, noting that the product is already widely available in China. Commerce Secretary Howard Lutnick called the H20 Nvidia's fourth-best chip and suggested that keeping Chinese firms reliant on US technology serves America's interests.
The legality of the arrangement remains uncertain. Trade lawyer Jeremy Iloulian said that without more details, it is difficult to determine whether the agreement counts as an export tax or another form of payment. Kyle Handley, a professor at the University of California, San Diego, added that it appears to function like an export tax regardless of the label.
Nvidia responded to requests for comment, saying it fully complies with US government rules for global markets and hopes export control regulations will allow American companies to compete in China and worldwide. Similarly, AMD confirmed that US authorities had approved exports of some of its AI processors to China but did not address the revenue-sharing provision, noting only that it follows all US export controls.
Industry analysts warned that the revenue-sharing requirement could cut chipmakers' profit margins and encourage Washington to impose similar levies on other critical exports. Bernstein analysts projected the measure could lower gross margins on China-bound processors by 5 to 15 percentage points, trimming roughly one percentage point from overall company margins.
At the same time, some observers saw potential upside. Sarah Kreps, a professor at Cornell's Brooks School of Public Policy, noted that the administration now appears willing to negotiate on previously non-negotiable issues and suggested this may not be the last such agreement. Hendi Susanto, a portfolio manager at Gabelli, which holds Nvidia shares, added that while the remittance could strain finances, it might also preserve access to the large and growing Chinese market.
The agreement between the White House and two of America's leading semiconductor firms reflects a new chapter in the intersection of national security, economic strategy, and high-level corporate negotiations. In this emerging landscape, policy boundaries appear increasingly open to financial bargaining, raising questions about how far market considerations should influence national security decisions.