Nvidia and AMD to hand over 15% of their AI chip revenue to China
The United States government has brokered an unusual deal with semiconductor giants Nvidia and Advanced Micro Devices (AMD) to pay 15% of revenue from AI chip sales to China. The deal, which comes after Nvidia's CEO Jensen Huang met with President Donald Trump at the White House last week, allows both companies to resume sales of their AI chips to China, reversing an earlier export ban.
The US Commerce Department began issuing licenses on Friday for the sale of Nvidia's H20 chip to China. However, China's cyberspace watchdog has summoned Nvidia to explain potential backdoor risks in its H20 chips, raising security concerns over the deal.
Nvidia has denied these claims, insisting its products do not allow remote access. Alasdair Phillips-Robins, a former adviser at the Commerce Department during the former President Joe Biden's administration, suggests the deal may trade away national security protections for revenue. The article does not provide information on any response from the US Commerce Department regarding these new concerns.
The deal marks a significant shift in US chip export policy, allowing limited sales of advanced AI chips to China despite earlier restrictions. This arrangement may prompt other countries and companies to seek similar concessions to access the Chinese market, potentially challenging the strategic leverage the US holds over chip exports.
The U.S. government continues to monitor transshipment hubs like Singapore and the UAE to prevent illegal chip transfers to China. The deal affects the complex global semiconductor supply chain in which many non-U.S. companies, such as Taiwan’s TSMC, the Netherlands' ASML, and South Korea's SK Hynix, play key roles in manufacturing and supplying components for these chips.
Critics argue that allowing Nvidia and AMD to sell AI chips to China could accelerate China's AI capabilities, potentially undermining US strategic interests. The deal may complicate efforts to control the spread of advanced semiconductor technology, given the globalized nature of the semiconductor supply chain. Observers note this "special treatment" for Nvidia and AMD could set precedents for other firms, diluting the impact of US export controls.
The Trump administration maintains that the chips are less advanced than those sold to allies. AMD produces an AI chip called the MI308, but the company did not respond to a request for comment. The deal is expected to generate significant revenue for both Nvidia and AMD, with China representing a significant market for both companies, with combined sales projected to exceed $25 billion (€23 billion).
In summary, the US government’s revenue-sharing export deal with Nvidia and AMD to sell AI chips to China is a calculated compromise to maintain US influence and collect revenue while managing strategic technology transfer risks amid global supply chain complexities. The deal's implications extend beyond the semiconductor industry, potentially reshaping the geopolitical landscape of technology trade.
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