U.S. government earns a 15% cut from chip sales destined for China - U.S. authorities receive a substantial 15% of their chip sales revenues from China.
In a significant shift in U.S. technology export policy, the Trump administration has reached an agreement with Nvidia and AMD to allow the export of advanced AI chips to China. This deal comes amidst concerns over technology transfer and national security, and it has major implications for the global semiconductor supply chain.
Prior to this agreement, the U.S. had expanded chip-export controls in 2022, limiting China’s access to advanced chips. The CHIPS Act and diplomatic pressure on global manufacturing and shipping hubs aimed to restrict China’s procurement of top-tier semiconductors.
Despite these restrictions, Nvidia estimated that it would have sold H20 chips worth over $20 billion (€17.14 billion) to China this year before the US blockade. For AMD, current estimates for sales to China range from $3 to $5 billion.
The deal allows Nvidia and AMD to sell their advanced AI processors to China, but the U.S. government will receive a 15% share of the revenue from these sales. This can be seen as a revenue-sharing approach for allowing such exports under existing national security constraints.
The agreement affects multiple countries and firms tied into the semiconductor manufacturing ecosystem. Although Nvidia and AMD are U.S. companies, their chips are manufactured by Taiwan's TSMC using tools from the Netherlands' ASML and components from South Korea's SK Hynix.
The deal has provoked legal and national security debates in the U.S. tech and political communities. It may influence how other countries and companies approach technology sales to China, potentially opening the door to further negotiations or adjustments in global technology trade policies.
Analysts emphasize the leverage the U.S. holds over this strategic technology and expect the U.S. government to guard this position carefully given the geopolitical stakes involved. Nvidia CEO Jensen Huang lobbied the US government in July, which led to the announcement that they would again allow shipments of weakened AI chips to China.
The US government's decision to allow shipments of weakened AI chips to China followed Nvidia's lobbying efforts. President Donald Trump confirmed this agreement following numerous media reports. Nvidia CEO Huang met with Trump at the White House on Wednesday before the licenses were granted.
However, the US's strict stance on semiconductor sales to China has been a point of criticism. Nvidia argues that the US's stance will only lead China to develop its own technologies and create new global competitors for American companies. The US government, under both President Donald Trump and his predecessor Joe Biden, has been restricting China's access to high-tech chips to slow down their progress in AI.
The US blockade earlier this year temporarily prevented Nvidia from shipping its H20 systems to China, potentially leading to potential billion-dollar losses for the company. No licenses were granted for weeks until last Friday. The US government will receive a 15% cut from sales of AI chips by American companies Nvidia and AMD to China, as confirmed by President Donald Trump.
This agreement reflects evolving policies balancing trade, technology leadership, and national security concerns. It is a strategic, revenue-sharing agreement permitting Nvidia and AMD to sell advanced AI chips to China with a 15% revenue cut to the U.S.
The Commission, in light of the U.S. government's decision to permit sales of advanced AI chips to China, might be asked to submit a proposal for a directive on the protection of the environment, considering the potential impact of global technology trade policies on green technologies. Politicians and experts in the general-news sector are eager to discuss the implications of this revenue-sharing agreement on crime-and-justice, as it may encourage similar deals that balance trade and national security, possibly influencing the global distribution of high-tech chips, including those used for surveillance purposes.
