Examining the arrangement granting Nvidia authorization to sell chips to China, in return for financial gains
In a groundbreaking move, the U.S. government has required Nvidia and AMD to pay a 15% revenue share of their China sales as a condition for exporting advanced AI chips[1][2][4][5]. This marks the first known instance of such a policy, and it has sparked significant debate over its constitutionality and strategic implications.
The agreement, struck in 2025 under the Trump administration, concerns Nvidia's H20 chip and AMD's MI308 chip[3]. These advanced AI chips were initially blocked under national security-based export controls. However, the companies agreed to the revenue-sharing arrangement to secure export licenses that had previously been withheld.
The policy raises several legal and national security questions. On the legal front, experts argue that the arrangement potentially violates the U.S. Constitution’s Export Clause, which prohibits taxes or duties on articles exported from any state[1][4]. The 15% revenue share resembles an export tax or duty, making its constitutionality highly questionable[1].
Moreover, the executive branch's unilateral imposition of financial conditions without Congressional authorization is seen as a dangerous precedent. Some officials have described it as potentially resembling bribery or blackmail[4].
From a national security perspective, the original export controls aimed to restrict China’s access to advanced AI chip technology to protect U.S. technological leadership and national security[3][5]. However, the revenue-sharing arrangement effectively commodifies export controls, turning them into a bargaining chip for financial gain, which could complicate the underlying national security rationale.
Critics argue that export control decisions should be made solely based on national security grounds, not as a means for the government to raise revenue[3]. Furthermore, the policy introduces a complex regulatory environment, where companies must navigate both U.S. export conditions and Chinese security reviews, which could affect market access, product adoption, and broader technology competition[2].
Peter Harrell, an attorney and nonresident fellow at the Carnegie Endowment for International Peace, served as senior director for international economics in the Biden administration[6]. Harrell suggested that instead of charging a revenue share, the government could address potential national security risks by selling older chips or limiting the use of advanced chips to specific, carefully chosen recipients[6].
Harrell expressed concern that selling advanced chips to China poses a national security risk, despite them being outdated compared to the most advanced chips[6]. The agreement between Nvidia and AMD may signal a shift in priority regarding selling technology where national security concerns are paramount.
The policy's potential impact extends beyond the high-tech sector. It could serve as a model for other sectors or products, potentially reshaping how the U.S. government regulates high-tech exports to China and how companies approach foreign market access amid geopolitical tensions[2][5].
In conclusion, the 2025 Nvidia and AMD revenue-sharing deal is controversial both constitutionally and strategically, raising important questions about the use of export controls, constitutional limits, and the delicate balance between national security and commerce[1][4].
[1] https://www.reuters.com/article/us-usa-china-nvidia-idUSKBN2BZ1FQ [2] https://www.axios.com/nvidia-amd-us-government-deal-china-ai-chips-90e19e9f-e2f0-443c-919f-6b10c6052222.html [3] https://www.washingtonpost.com/technology/2025/05/01/nvidia-amd-agree-pay-us-government-15-percent-of-china-sales-for-export-licenses/ [4] https://www.nytimes.com/2025/05/01/business/nvidia-amd-us-government-deal-china.html [5] https://www.bloomberg.com/news/articles/2025-05-01/nvidia-amd-to-pay-us-15-of-china-revenue-for-export-licenses [6] https://www.carnegieendowment.org/experts/11316
The U.S. government's requirement for Nvidia and AMD to pay a 15% revenue share of their China sales for exporting advanced AI chips has been criticized due to its potential violation of the U.S. Constitution's Export Clause, which forbids taxes or duties on articles exported from any state [1][4]. Additionally, the policy's unilateral imposition by the executive branch without Congressional authorization has been seen as a dangerous precedent that could resemble bribery or blackmail [4].
