Donald Trump's Chip Revenue Deal Comes Under Scrutiny

Newsweek

2 days ago

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American chipmakers Nvidia and Advanced Micro Devices have agreed to give 15 percent of revenue from certain artificial intelligence chip sales in China to the U.S. government as a condition of obtaining export licenses.
The arrangement ties government permission to a revenue-sharing requirement, prompting questions about constitutionality and the purpose of export controls amid a high-stakes rivalry with China for AI computing capacity.
Newsweek contacted the White House for more information on the deal via email.
Why it Matters
The deal alters a long-standing norm that U.S. export controls serve national security ends rather than revenue generation, potentially setting a precedent for monetizing access to foreign markets and complicating the legal framework governing exports. Critics have flagged legal issues, citing the Constitution's prohibition on export taxes and arguing that the arrangement blurs the line over national security controls.
What To Know
Nvidia and AMD had sought licenses to resume sales of high-performance AI chips to Chinese customers after previous restrictions had limited exports, with the chips named as Nvidia's H20 and AMD's MI308.
However, the White House gave Nvidia the all-clear in July to resume sales with China. Nvidia founder and CEO Jensen Huang said on July 14 the U.S. government had assured him it would restore the licenses to sell H20s in China.
"General purpose, open-source research and foundation models are the backbone of AI innovation," said Huang. "We believe that every civil model should run best on the U.S. technology stack, encouraging nations worldwide to choose America."
President Donald Trump listens to questions from reporters after speaking on economic data in the Oval Office on August 07, 2025 in Washington, DC.
President Donald Trump listens to questions from reporters after speaking on economic data in the Oval Office on August 07, 2025 in Washington, DC.
Getty Images
Now though, the all clear has been revealed to be conditional on the U.S. receiving 15 percent of the revenue from sales of artificial intelligence chips in China, according to reports from the Washington Post.
Legal experts and former officials said the deal was highly unusual and could invite judicial challenges or congressional oversight.
Peter Harrell, the White House's senior director for international economics under the Biden administration, said on social media: "In addition to the policy problems with just charging Nvidia and AMD a 15 percent share of revenues to sell advanced chips in China, the US Constitution flatly forbids export taxes.
"In addition to the Constitution, 50 USC 4815(c) expressly prohibits fees for export control licenses. 'Fees-No fee may be charged in connection with the submission, processing, or consideration of any application for a license...' This is from the 2018 Export Control Reform Act."
What People Are Saying
Stephen Olson, former U.S. trade negotiator, told Bloomberg: "What we are seeing is in effect the monetization of US trade policy in which US companies must pay the US government for permission to export. If that's the case, we've entered into a new and dangerous world."
A spokesperson for Nvidia, quoted in The Washington Post on Aug. 10, 2025, said: "We follow rules the U.S. government sets for our participation in worldwide markets. While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide."
Alexandra Mousavizadeh, CEO of Evident and creator of the Global AI Index, previously told Newsweek that there were two different approaches to China's AI development: "You can continue to try and contain access to chips and close the walls off. While you're doing that, you're doubling down on investment into data infrastructure, supporting the development of AI in the U.S. and being first in that race,
"Or you open up completely and you say, 'Look, it's to the benefit of all that everyone has access to everything, because the collaboration between Europe, the U.S. and China in the past has been what has led to the ability to get to where we are today.'
What Happens Next
The arrangement could prompt legal action from those arguing the revenue-sharing arrangement functions as an impermissible export tax, while Congress could open hearings to examine the administration's role and the terms of the licenses.