Trump admin reaches landmark chip export deal with Nvidia and AMD
Image: SeekingAlpha
The White House just sat down at Nvidia and AMD’s table and started eating from their basket of chips: Both companies have agreed to pay the US government a percentage of their chip sales in China in exchange for being allowed export licenses, according to multiple reports published late Sunday.
- Nvidia will share 15% of its revenue from sales of its H20 chip in China under the agreement, while AMD will also share the same portion of its MI308 chip sales in the country.
- The deal marks a reversal from the Trump admin’s previous policy earlier this year, which blocked Nvidia and AMD from selling those chips to China in an effort to “safeguard our national and economic security.”
- It’s also the first time the US government has ever agreed to a revenue-share deal in exchange for granting an export license, according to multiple analysts.
In comments on Monday, President Trump framed the deal as extracting additional money for the US government while still protecting America’s technological edge over China, since the chips covered under the agreement are essentially “obsolete” compared to newer tech the companies currently produce.
- Nvidia and AMD developed those two chips with reduced capabilities specifically for the Chinese market, after the Biden admin placed export restrictions on more advanced AI chips in 2023.
The deal could set a major precedent
Nvidia and AMD’s agreement represents a notable shift in how the US government approaches export controls. “It turns the export control function of the government into a money-raising proposition, and that’s never happened before,” said Gary Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics.
- While the US government is barred from imposing taxes on exports under both the Constitution and federal law, experts say it’s unclear whether the US government’s 15% cut from Nvidia and AMD sales in China would count as an export tax—or a voluntary agreement instead.
- It’s also unclear who would have standing to potentially challenge the deal in court.
Looking ahead…The White House yesterday said it’s still working out the finer details of Nvidia and AMD’s new export agreement, and also indicated it could serve as a template for other companies facing export controls. The deal is expected to generate ~$2.4 billion for the US government by the end of this year, though sales could be impacted by the Chinese government’s push to steer domestic companies away from American-made chips.
📊 Flash poll: How do you feel about the Trump admin’s new deal to grant Chinese export licenses for certain lower-powered Nvidia and AMD chips in exchange for 15% of the revenue made in China?
See a 360° view of what pundits are saying →
Sprinkles from the Left
- Some commentators argue that drawing a few extra billion dollars of tax revenue doesn’t mitigate the risks of allowing China access to advanced chips, and claim Trump is undermining international trust that America will hold firm on export controls.
- Others contend that the White House’s deal will help China achieve its AI goals more quickly, and argue the US may come to regret this once Beijing has built up its own domestic capabilities to make chips.
- “Why government should not intervene in business” –WaPo Editorial Board
- “The Nvidia Chip Deal Helps China Achieve Its AI Goals” –Dave Lee, Bloomberg
- “China is winning the trade war Trump started” –Max Boot, WaPo
Sprinkles from the Right
- Some commentators argue that step by step, Trump is expanding the long arm of the state into more of the private economy and progressing towards government control of private business, and nobody in his party seems willing to stop him.
- Others contend that Trump is hamstringing his own success with the Nvidia-AMD deal, which may signal to other companies planning a major investment in the US to think twice because Trump might demand a cut of the deal.
- “Now Trump Wants an Export Tax” –WSJ Editorial Board
- “Trump’s mafioso export policy cripples his own success” –David Mastio, Kansas City Star
- “Trump is creating a perfect tax for corporate America — one it’ll pay. Here’s what to watch.” –Charlie Garcia, MarketWatch
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