AMD and Nvidia to Divert 15% of China Chip Sales to US – What It Means for Market Share and the Global Chip Industry

AMD and Nvidia, two of the key chip maker players globally, have agreed to provide the US government with 15 per cent of the revenue generated from sales of certain advanced computer chips to China, a top US official has said.

The arrangement, made amid geopolitical uncertainties rooted in chip supply, is set to disrupt the chipmaker industry, which affects multiple sectors relying on them – from consumer technology to military defence.

What's The Deal About?

According to a Reuters report, the agreement—covering Nvidia's H20 and AMD's MI308 AI chips—is a precondition for obtaining export licenses, according to multiple officials.

One official, however, said they did not know the timing or process for implementing the agreement with Nvidia and AMD, but emphasised that the administration would act within the law.

For context, the US Constitution's Export Clause forbids Congress from imposing taxes or duties on goods exported from any state, though it applies to taxes and duties, not user fees.

When asked about paying 15% of revenues to the US, a Nvidia spokesperson stated, 'We follow the rules the U.S. government sets for our participation in global markets.' They added that while the company has not shipped its H20 chips to China for months, they hope export regulations will enable the United States to compete both in China and globally.

An AMD spokesperson confirmed the US had approved its applications to export specific AI processors to China but did not address the revenue-sharing arrangement directly, noting only that AMD complies with all US export control laws.

Current Market Share

Nvidia currently commands an overwhelming share of the global discrete GPU market—about 90% as of Q3 2024—according to Jon Peddie Research. AMD has recouped some ground recently, climbing to approximately 17% by Q4 2024, up from just 10% earlier that year.

In the data-centre AI accelerator segment, Nvidia leads with roughly 65% of the market, with AMD trailing at about 11%, based on Q1 2024 figures.

Nvidia versus AMD: What's Their Latest Performance?

On the financial front, Nvidia delivered blockbuster results for fiscal year 2025, with annual revenue soaring 114% year-on-year to $130.5 billion (£97.21 billion), and net income climbing 145% to $72.9 billion (£54.30 billion). In its first quarter of fiscal 2026 (ended April 2025), Nvidia posted $44.1 billion (£32.85 billion) in revenue—up 69% year-over-year—and achieved record data-centre revenue of $39.1 billion (£29.13 billion).

AMD, by contrast, reported a much smaller yet still solid performance in Q2 2025: revenue hit a record $7.7 billion (£5.74 billion), with GAAP net income of $872 million [£649.54 million] (or $781 million [£581.76 billion] on a non-GAAP basis), despite an $800 million (£595.91 million) hit from US export restrictions.

A 'Slippery Approach'?

Bernstein analysts warned that while allowing Nvidia and AMD to sell AI chips to China—keeping 85% of revenues—is better than a ban, the 15% 'pay-to-play' fee sets a troubling precedent.

It added that blocking sales would have ceded China's AI market to Huawei, fostering its ecosystem dominance, which analysts deemed undesirable. Still, they questioned whether the Trump administration's deal is a one-off or a slippery slope for broader industries.

'Sure, it might raise some money [for the government], but doesn't seem to address any strategic issues beyond a grab for dollars,' Bernstein said.

Bernstein argued the arrangement lacks strategic merit, framing it as a revenue grab rather than addressing national-security concerns previously cited over US chip exports to China.

Consequence of Complex Trade-Offs

Ultimately, the Nvidia and AMD revenue-sharing agreement with Washington underscores the complex trade-offs at the intersection of national security, economic strategy, and corporate competitiveness.

While it preserves partial access to the lucrative Chinese AI chip market, it also raises constitutional questions, sets a potentially far-reaching precedent, and leaves doubts about its strategic rationale.

For now, the move may stave off Huawei's dominance. Still, its long-term implications—for US tech leadership, global market dynamics, and the boundaries of government involvement in private commerce—remain uncertain. What is clear is that this deal will be closely watched by industry, policymakers, and competitors alike.