Trump Administration Lifts China Chip Ban for Revenue Share

The Trump administration reached an agreement in early August with Nvidia and Advanced Micro Devices (AMD) to lift export bans on high-end artificial intelligence chips to China. Under the terms of the deal, both companies must pay the U.S. government 15 percent of the gross revenue generated from those sales. This policy reverses restrictions on Nvidia's H20 and AMD's MI308 microprocessors, which were originally implemented under the Biden administration to prevent China from achieving AI superiority and reverse-engineering trade secrets.

The shift followed extensive lobbying by Nvidia CEO Jensen Huang, who emphasized the multibillion-dollar commercial potential of the Chinese market. However, the arrangement has drawn scrutiny from legal experts who argue the payment functions as an unconstitutional export tax, prohibited by Article I of the U.S. Constitution. While the administration maintains the payment is not a tax, critics claim it does not qualify as a user fee because the cost is tied to the value of the goods rather than government service costs.

In a separate move to bolster domestic semiconductor interests, the administration announced it will acquire a 9.99 percent equity stake in Intel for $8.9 billion. The government intends to fund this acquisition primarily through previously approved grants from the CHIPS Act.