Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Nvidia and AMD Agree to Pay 15% of China Chip Sales to US
Trade Wars | Aug 11, 2025
Image: Freepik AI
Nvidia and AMD's 15% Payment Deal with the United States Government Could Upend Global Tech Trade
Nvidia and AMD have agreed to pay 15% of their revenue from Chinese chip sales to the US government in exchange for export licenses. It follows months of export restrictions on high performing chips like Nvidia's H20 exports to China which were halted earlier this year. Analysts previously warned that curbing H20 chip exports to China could cost up to $8 billion in quarterly sales, while AMD projected a $1.5 billion hit this year from similar restrictions.
The new 15% payment for market access is an unprecedented arrangement, one that highlights the US strategy to assume control over critical AI and semiconductor technologies. It raises significant concerns around global tech trade, supply chains and geopolitical tensions, especially given China's reaction and what's next for tech competition and national security, both taking center stage with a new layer of complexity to the relationships between the US and China.
See: Microsoft Blocks DeepSeek App for Employees Only
Canada and other global players will feel the ripple effects of these changes, especially if national security continues to impact global trade policies, which could force countries (and companies) to choose sides in a growing tech war.
China’s Reaction
The Chinese government has long accused Washington of using technology and trade policy to limit China’s rise in advanced industries. Following the 15% deal, state media criticized the H20 chip as outdated, unsafe, and potentially embedded with backdoor access, showing the growing mistrust of American AI chips while suggesting that the 15% levy is a political tool rather than a commercial safeguard.
As China sees the US moving to limit its access to critical technologies, the message is pretty clear that China is not backing down. They are already investing heavily in building alternative solutions. With companies like Huawei pushing forward on semiconductors and AI chips, China’s push for tech independence is only going to gain speed.
Aug 12 Update: Bloomberg reported that China has issued new guidance advising domestic firms to avoid using Nvidia's H20 chips in certain projects, especially any government use and to prioritize domestic chips wherever possible. This restriction will likely accelerate China's push for self reliance in advanced semiconductor protection, and could reduce demand for Nvidia's products in one of its largest markets.
Supply Chain Disruptions
With China representing 13% of Nvidia’s and 24% of AMD’s total revenue, even a small sales disruption can ripple through suppliers, distributors, and end markets. Semiconductor assembly and packaging hubs in Southeast Asia could also see order volatility if Chinese buyers switch to local alternatives.
The semiconductor industry is already experiencing shortages and supply chain disruptions, especially as the US and China continue to fight for dominance in manufacturing, however with the introduction of a type of financial leverage into the equation, the US could disrupt the delicate balance that keeps the global supply chain moving forward. Global logistics networks could be forced to reconfigure as companies diversify sourcing to hedge against export licensing risks.
Read: Fintech Leader Insights on DeepSeek’s AI Disruption
This will hit industries reliant on critical AI chips and semiconductors, including everything from automotive and consumer electronics to AI and fintech. For companies in Canada, especially those that have tech partnerships with China, there will be an increasing need to diversify their supply chain sources to avoid disruptions and remain resilient in the face of trade barriers and tariffs.
Tech Trade, Barriers, Tariffs, and Control
With this new 15% payment arrangement, technology export controls could evolve into tools of economic statecraft that could be applied in other high-value tech sectors. If adopted more widely, it's a model that could ignite retaliatory tariffs or revenue-sharing requirements from other governments, creating a patchwork of national rules that complicate multinational operations.
Countries like India, which is rapidly scaling its semiconductor sector, are no doubt watching closely to see whether aligning with one tech bloc risks alienating another.
Why It Matters
The growing tech and supply chain tensions mean that Canadian companies must carefully position themselves and ensure they adapt to the changing regulatory environment. As both China and the US reconfigure their tech ecosystems, Canada’s role as a tech hub will depend on its ability to stay nimble, maintain access to key technologies and markets, and diversify trade relationships.
See: Global Rules Now Count Intangibles. So Can Canada
For companies, investors, and policymakers, it's a strong reminder that the next front in trade disputes will not be over commodities, but over the intangible building blocks of future economies.
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