The Big Story 

Two major chipmakers in the U.S., Nvidia and AMD, have struck an unusual agreement to provide the federal government some of their revenue from chip sales to China — a deal that experts say raises constitutional questions and may set a concerning new precedent. 

© Alex Brandon, Associated Press

The two firms have agreed to share 15 percent of the revenue generated from selling advanced artificial intelligence (AI) chips to China in order to secure export licenses after a months-long pause, a U.S. official confirmed to The Hill on Monday. 

“It’s bizarre in many respects and pretty troubling because Congress didn’t have anything to say about this,” said Gary Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics.  

“It’s just the president’s own negotiating with the individual companies,” he continued. “That’s not how, historically, we’ve done business in this country.” 

Under the agreement, Nvidia will share 15 percent of its revenue from H20 chip sales to China, while AMD will share the same portion of its MI308 chip sales.  

Both of the Nvidia and AMD chips in question, which are graphics processing units (GPUs) designed for the Chinese market with U.S. export controls in mind, faced new restrictions from the Trump administration in April, effectively blocking sales to China. 

Last month, Nvidia and AMD said the U.S. government had assured them it would begin approving export licenses for the H20 and MI308 chips, although the Commerce Department reportedly did not start issuing licenses for several weeks. 

The new revenue-sharing agreement comes after Nvidia CEO Jensen Huang met with President Trump at the White House last week, according to Bloomberg.

Huang has found himself in a tricky situation, balancing Washington and Beijing’s interests as both countries vie for AI dominance.  

The agreement appears to remove a major impediment for both companies.

Nvidia said earlier this year it incurred $4.5 billion in charges associated with the chip restrictions in the first quarter and expected an $8 billion sales hit in the second quarter. AMD forecast a $1.5 billion hit to revenue this year. 

The deal represents a notable shift in how the government approaches export controls. 

“It’s quite extraordinary because it turns the export control function of the government into a money-raising proposition, and that’s never happened before,” Hufbauer said. 

Check out the full report at TheHill.com.

Welcome to The Hill’s Technology newsletter, I’m Julia Shapero — tracking the latest moves from Capitol Hill to Silicon Valley.

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