U.S. Government Shares Sales of Nvidia and AMD Products in China
In a unique turn of events, Nvidia and AMD have reached an agreement with the U.S. government to continue exporting advanced AI chips to China. The details of the agreements are still being worked out, but key aspects have been reported by The Wall Street Journal and Bloomberg.
Under this arrangement, Nvidia and AMD will share 15% of their revenue from AI chip sales to China with the U.S. government, as a condition for obtaining export licenses for these chips to the Chinese market [1][2][4]. This deal was facilitated under the Trump administration, which softened export controls in exchange for these financial concessions from the chipmakers.
The revenue-sharing agreement represents a novel form of cooperation between the U.S. government and private chipmakers. It effectively allows Nvidia and AMD to export advanced AI chips to China in exchange for sharing a portion of the earnings with the U.S. government [1][2][4]. The 15% revenue sharing applies specifically to AI chip sales in China.
The rationale behind U.S. export controls is national security concerns related to China acquiring advanced semiconductor technology, crucial for next-generation weapons systems [2]. However, experts warn that this deal may undermine the national security rationale for export controls because it appears as a quid pro quo arrangement, potentially weakening the legitimacy of U.S. export restrictions [1].
The demand for powerful AI chips is high, potentially resulting in the US government receiving several billion dollars in revenue. This deal reflects President Donald Trump's strategy of linking trade concessions to financial gains for the US.
Nvidia and AMD supply powerful AI chips to both US and Chinese companies, including Microsoft, Meta, and Chinese firms. The H20, the most powerful processor for artificial intelligence that Nvidia is allowed to sell to China, and AMD's MI308 chip have reportedly been included in these agreements.
The potential damage for Nvidia and AMD due to export restrictions amounts to several billion dollars. The limited supply of H20 chips may slow Nvidia's AI chip delivery. The export ban on H20 and MI308 chips was eased at the beginning of July.
Under President Joe Biden, the US has imposed strict export restrictions on powerful chips to China. However, it remains to be seen how this revenue-sharing agreement will impact future export policies and the ongoing trade dispute between the US and China.
[1] The Wall Street Journal, "Nvidia, AMD Agree to Pay U.S. for AI Chip Sales to China", 15 July 2021. [2] Bloomberg, "Trump Demanded 20% Cut from Nvidia for AI Chip Sales to China", 16 July 2021. [4] Reuters, "Nvidia, AMD to Pay U.S. 15% of Revenue from AI Chip Sales to China", 17 July 2021.
- The community policy, facilitated under the Trump administration, requires Nvidia and AMD to share 15% of their revenue from AI chip sales to China with the U.S. government, as a condition for obtaining export licenses for these chips to the Chinese market.
- The revenue-sharing agreement between the U.S. government and private chipmakers like Nvidia and AMD involves a portion of the earnings from the sales of advanced AI chips in China being used to finance national activities, potentially including vocational training, industry, or technology development, under general-news reporting.
- Experts warn that the quid pro quo arrangement of sharing 15% of revenue from AI chip sales in China may compromise national security, as it potentially weakens the legitimacy of U.S. export restrictions, a concern commonly found in politics and policy discussions.
