Billion-Dollar Dilemma: Nvidia and AMD Face Costly Decisions in China Market

This is a big change in tech relations between Washington and Beijing. Nvidia and AMD have agreed to give 15% of their profits from selling semiconductors in China to the US government. This applies to the export licenses for their most advanced AI chips, H20 (Nvidia) and MI308 (AMD).

For years, semiconductors from Nvidia and AMD were driven by cryptocurrency mining and the Bitcoin price surge. Now they are mainly sought after by the AI industry which is being watched closely by both the US and Chinese governments who call it a "technological revolution".

A geopolitical appeasement gesture, costly for the companies

After months of tensions, in mid-July 2025, Washington decided to relax its restrictions on exporting AI chips to China. This allowed the under-license sale of Nvidia’s H20 model — a chip designed specifically for the Chinese market.

The US did this after a complete blockade in April which prompted Beijing’s immediate response: export limits on certain critical rare earth elements essential to the high-tech industry.

The US reopened access to some restricted chips and China eased its resource restrictions. This détente was extended 90 days in early August as part of a broader tariff agreement.

But trust doesn’t seem to be fully restored. The Chinese authorities have quietly told their tech giants — Tencent, Baidu, ByteDance — to avoid the H20 for public and sensitive applications.

Even though Nvidia and AMD agreed to pay this heavy price to not lose the Chinese market, Beijing wants to accelerate the adoption of local solutions and decrease dependence on American tech.

Two heavy financial burdens

Nvidia lost $5.5 billion earlier this year due to the interruption or delay of its H20 chip exports to China. That’s everything from inventory adjustments to fulfilling contracts already signed.

AMD lost $800 million due to the slump in Mi308 processor sales. With these financial woes, the US Dollar Index also moved, reflecting investor concerns about American tech exports and the broader US-China trade tensions. These numbers, according to Reuters, show just how much these new regulations are hurting both companies.

China was 17% of Nvidia’s revenue in 2024. According to Nvidia CEO Jensen Huang, that’s down to 15% today. China is still a big chunk of Nvidia’s business and keeps NVDA stock price very sensitive to China.

This is part of America’s broader plan to reduce China’s dependence on certain technologies. A high-level official in the US told the Associated Press that selling in China now requires a 15% tax. This could be seen as a new way for the US to wage tech war against China.

Nvidia and AMD have a choice: they can sell to China and pay a big price for that or they can stop selling to China and give up one of the biggest markets in the world for high end semiconductors.