Nvidia and AMD might sell premium AI chips to China if they pay a fee to the US

Nvidia and AMD may sell AI chips to China, paying a 15% revenue fee to the US government.

: Nvidia and AMD have reached an agreement to pay the U.S. government 15% of their revenue from selling premium AI chips in China, specifically the H20 and MI308 models. This move comes amidst changing U.S. trade policies, which initially restricted AI chip sales to China, driven by national security concerns and trade negotiations over rare-earth elements. While these sales resume, the decision has received criticism from national security experts urging caution due to strategic risks. The situation reflects broader shifts in global trade relations and technology accessibility, emphasizing economic interests over earlier security narratives.

Nvidia and AMD have taken strategic steps by agreeing to pay a 15% fee of their revenue from high-end AI chip sales in China to the U.S. government. This arrangement, reported by the Financial Times, marks a shift in focus from strictly national security to economic and trade strategies, particularly involving tariffs. The chips in question include Nvidia's H20 models and AMD's MI308 models, both considered vital technology products due to their powerful AI processing capabilities.

Originally, the Trump administration imposed restrictions on exporting high-performance AI inference chips to China in April, but this ban was temporarily lifted months later. This shift occurred after Nvidia pledged to invest up to $500 billion in U.S. data centers, a move aimed at balancing national interests with the company's ambitions to capitalize on lucrative Chinese markets.

In July, Nvidia was permitted to resume sales of its specifically designed H20 chips to China. This decision followed Biden administration restrictions, showcasing a changing landscape in how U.S. policy approaches international trade and tech, reflecting deeper trade negotiations over essential rare-earth elements necessary for tech manufacturing.

Despite resumed sales, critics have voiced concerns regarding national security implications. U.S. Commerce Secretary Howard Lutnick acknowledged the linkage between Nvidia's strategies and ongoing talks about rare-earth materials. These components, vital for technologies like rechargeable batteries in electric vehicles, have become a point of leverage in trade discussions.

Expert opinions vary, with national security professionals advising caution against allowing high-tech products into potential adversary countries. Efforts to balance economic interests with safeguarding sensitive technology have sparked debates, highlighting the complexities of global trade dynamics and strategic alliance management in a rapidly evolving technological landscape.

Sources: Financial Times, TechCrunch

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