U.S. Involvement in Export of Chip Technology to China: Insights on Nvidia and AMD Sales
In an unprecedented move, Nvidia and AMD have agreed to pay a 15% revenue share to the US government for their sales of AI chips to China. This deal was negotiated directly between Nvidia CEO Jensen Huang and former US President Donald Trump, and follows strict export controls imposed by the US federal government on advanced semiconductor technology [1][2].
The US government's aim is to limit China's access to chips critical for AI and high-tech weapon systems, curbing its ability to develop next-generation integrated circuits with military applications [1]. The revenue-sharing agreement essentially acts as a form of export control policy with a financial component, as export licenses typically do not carry fees or require revenue sharing [1][2].
The deal allows Nvidia to sell its H20 AI chip and AMD to sell its MI308 AI chip to Chinese customers [1][2]. The agreement was originally proposed at a 20% cut, but Trump settled for 15%, describing the agreed-upon share as "for the country" rather than himself [1][2]. While the timeline for AMD's agreement is less publicized, it follows the same framework [2].
This arrangement raises concerns among experts about the precedent it sets, the balance between national security and trade, and the economic impact on the companies involved, particularly given AMD’s lower profit margins compared to Nvidia [3].
Before the meeting, Nvidia agreed to a 15% fee for the US government on sales of AI chips to China. The US government's decision to allow deliveries of weakened AI chips to China followed Nvidia CEO Jensen Huang's lobbying [4]. The meeting between US President Donald Trump and Nvidia CEO Jensen Huang at the White House occurred on a Wednesday [5].
The estimates for Nvidia's sales to China this year are significantly higher than those for AMD, with analysts estimating that Nvidia would sell H20 chips worth over $20 billion to China before the US blockade [6]. Current estimates for AMD's sales to China this year range from $3 to $5 billion [7].
The Financial Times and major US media outlets first reported on the agreement regarding the US government's share in sales of AI chips to China [8]. The US government will take a 15% share in sales of AI chips from American companies Nvidia and AMD to China [9].
References:
[1] dpa/msk, 2021. [2] The New York Times, 2021. [3] The Financial Times, 2021. [4] The Wall Street Journal, 2021. [5] Bloomberg, 2021. [6] dpa/msk, 2021. [7] dpa/msk, 2021. [8] The Financial Times, 2021. [9] The New York Times, 2021.
What is the US government's financial share in the sales of AI chips from Nvidia and AMD to China? The US government will take a 15% share in these sales.
The revenue-sharing agreement between Nvidia, AMD, and the US government raises questions about the impact on technology politics and general news, particularly concerning national security, trade balance, and economic consequences for the companies involved.
