Nvidia and AMD have agreed to U.S. President Donald Trump's planned 15% fee on chip sales to China, according to several published reports.
The companies are willing to pay fees for export licenses for Nvidia's H20 and AMD's MI308 -- GPUs that could boost China's AI capabilities, according to a report by Financial Times. The administration had previously restricted sales of the chips to China, citing national security concerns. The companies stand to make billions of dollars as China's AI appetite fuels powerful GPU demand.
"We follow rules the U.S. government sets for our participation in worldwide markets," an Nvidia spokesperson said in a statement. "While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide. … America's AI tech stack can be the world's standard if we race."
Bargaining chips
Last month, after meetings with the administration, Nvidia and AMD both said they would resume chip sales, while not mentioning potential fees being part of the agreement. In May, Nvidia said it had incurred $4.5 billion in charges due to excess inventory for its H20 processors in one quarter alone. The company said that, without restrictions, it would have gained $2.5 billion in sales. Nvidia's 2025 revenue from China was $17.11 billion before April's H20 ban, accounting for 13.11% of its total global sales.
And, at AMD, "AI business revenue declined year over year as U.S. export restrictions effectively eliminated MI308 sales to China," CEO Lisa Su told investors on an earnings call last week.
Alvin Nguyen, senior analyst at research firm Forrester, said the absence of American chipmakers has strengthened Chinese firms, like Huawei, as the country races to compete in the AI arms race and fill the GPU void. "Progress by Chinese semiconductor companies in their AI chip efforts have been impressive and would likely decrease demand for non-Chinese GPUs long term, creating more competition and weakening the position of current Western chip manufacturers over time," Nguyen said in an email.
China is not going to sit back and do nothing.
Steven DickensCEO and analyst, HyperFrame
Steven Dickens, CEO and analyst at HyperFrame Research, said the semiconductor firms benefit, despite the increase in fees.
"These are fundamental weapons in the race for AI supremacy," Dickens said in an interview. "You can stop Nvidia and AMD from selling completely -- and that hurts those companies by turning off a revenue stream. Does it stop the problem? Strip the politics out of it. … It's still a good deal for AMD and Nvidia. China is a key market that has rampant demand for their companies."
Huawei has made significant strides in its own GPU offerings, claiming its Ascend 910B is on par with Nvidia's A100 GPUs. Nvidia still has a price and platform advantage, with developers already familiar with its well-established CUDA software ecosystem.
"China is not going to sit back and do nothing," Dickens said. "Nvidia is better and cheaper than Huawei. And China is a key market with rampant demand. Who is the loser here?"
Potential legal struggle
Trump's latest move will likely face a legal battle as the U.S. Constitution forbids export taxes, experts said. The Trump administration has used emergency powers to push its trade agenda -- with sweeping tariff hikes bypassing the normal congressional approval process.
Article I, Section 9, Clause 5 of the U.S. Constitution states, "No Tax or Duty shall be laid on Articles exported from any State." But the U.S. does allow fees for permitting and costs associated with exports. Export controls are normally enacted for national security reasons without regard to producing government revenue.
William Reinsch, senior adviser at the Center for Strategic and International Studies and a former Clinton administration undersecretary of commerce, worried about the national security implications. "From a policy perspective, it essentially says our national security is up for sale, which is not a good message to convey," he said in an email.
AMD and the White House did not immediately respond to a request for comment.
Shane Snider, a veteran journalist with more than 20 years of experience, covers IT infrastructure at Informa TechTarget.
