Red Bulletins | August 11, 2025
Introduction
In a move that blends geopolitics, technology, and high-stakes commerce, NVIDIA and AMD have agreed to share 15% of their Chinese AI chip sales revenue with the U.S. government in exchange for access to one of the world’s largest technology markets. The unprecedented agreement, confirmed by U.S. officials on Sunday (Reuters), is poised to reshape the competitive landscape for the semiconductor industry.
This development comes at a time when global AI chip demand is skyrocketing, with NVIDIA maintaining a commanding lead in high-performance computing while AMD steadily gains ground in data center markets.
Detailed Event Coverage
The Export License Breakthrough
Earlier this year, the Biden administration tightened export controls on advanced AI chips to China, halting the sale of NVIDIA’s H20 and AMD’s MI308 processors. These chips were specifically designed to comply with earlier U.S. trade rules but were swept into the April restrictions.
In June, after months of negotiations, the Commerce Department reinstated export licenses—on the condition that the two companies remit 15% of their Chinese AI chip sales revenue to the U.S. government. This revenue-sharing deal is the first of its kind, blending trade policy with direct financial recapture from a regulated market.
China’s Role in Chip Revenues
- NVIDIA: China accounted for ~$17 billion in sales in the last fiscal year—about 13% of total revenue.
- AMD: China represented ~$6.2 billion, nearly 24% of its annual revenue.
While the deal grants access to a lucrative market, it also eats into profit margins—impacting earnings projections for both companies.
Latest Updates
NVIDIA’s Earnings Momentum
NVIDIA continues to ride an AI-driven boom. In Q4 FY2025, the company’s data center revenue jumped 93% year-over-year to $35.6 billion, propelled by demand from cloud providers and AI labs (Nasdaq). The company’s stock remains near all-time highs despite the China revenue cut.
AMD’s Mixed Quarter
AMD reported $3.2 billion in data center revenue for Q2 2025, a 14% increase from the previous quarter. However, results fell short of Wall Street expectations, prompting a 5% share drop (Reuters). AMD remains bullish, forecasting $8.7 billion in Q3 2025 revenue, largely from AI chip growth.
Market Reactions
The stock market’s response to the revenue-sharing deal has been cautious. While analysts acknowledge the strategic necessity of China market access, there’s concern that reduced margins could dampen long-term profitability.
Expert Opinions
Tech analyst Dan Ives of Wedbush Securities called the agreement a “necessary evil” for U.S. chipmakers, enabling access to a critical growth market while adhering to national security directives.
According to a Barron’s report, NVIDIA’s strong software ecosystem, particularly its CUDA platform, gives it an edge in maintaining dominance despite financial concessions. AMD, meanwhile, is expected to leverage its competitive pricing and growing AI partnerships to capture market share.
Impact & Reactions
U.S. Technology Policy
This deal marks a shift in U.S. trade enforcement—from blanket bans to controlled access with financial clawbacks. It sets a precedent for future export arrangements in sensitive tech sectors.
China’s AI Market
China remains the second-largest AI chip market after the U.S., with rapid adoption across cloud services, autonomous driving, and smart manufacturing. Access to this market is vital for both companies’ long-term strategies.
Local Context: Silicon Valley & Austin
- Santa Clara, California (NVIDIA headquarters) stands to see continued expansion in AI R&D, even with slimmer margins.
- Austin, Texas (AMD’s base) may channel more resources into AI-focused chip development to close the performance gap with NVIDIA.
Unique Insight:
While the 15% cut is financially significant, the alternative—complete exclusion from China—would have been far worse. This arrangement may become a blueprint for “managed trade” in strategic technologies, balancing economic interests with national security.
Conclusion
The NVIDIA and AMD revenue-sharing deal with the U.S. government is more than a corporate earnings story—it’s a signal of how geopolitics and technology are converging in the AI era. With China’s AI market too big to ignore and U.S. regulations too strict to bypass, strategic compromises like this may define the future of high-tech trade.
For investors and policymakers alike, the question now is whether this model can sustain innovation while safeguarding national interests—or whether it will slow down the semiconductor arms race.
It means companies like NVIDIA and AMD can continue selling advanced AI chips to China, but must give 15% of those sales’ revenue to the U.S. government. This reduces profit margins but preserves access to a critical market (Reuters).
Despite the revenue cut, NVIDIA’s strong AI chip demand—especially in the data center segment—should sustain growth. However, investors should expect slightly reduced margins.
China’s rapid adoption of AI across sectors like cloud computing, manufacturing, and transportation makes it the second-largest AI chip market globally. For companies like NVIDIA and AMD, it’s essential for long-term revenue growth.
It signals a shift toward selective engagement rather than outright bans—allowing exports under strict financial and compliance conditions. This could become a model for other sensitive industries.
