The White House indicates chip revenue deals might expand beyond Nvidia and AMD

Nvidia and AMD to share 15% revenue with the US for exporting AI chips to China, possibly expanding to more companies.

: The US administration has brokered a unique deal allowing Nvidia and AMD to resume exporting certain AI chips to China in return for a 15% revenue share to the US government. This move marks a significant shift from previous export policies, raising questions about potential future extensions to similar deals with other semiconductor firms. Critics argue that this deal could compromise national security by prioritizing economic benefits, while others see it as a pragmatic response to global market dynamics. The announcement sparks discussions on how national security policies might adapt to market pressures in an increasingly interconnected world.

The US administration, under President Donald Trump, has initiated an unprecedented agreement with semiconductor giants Nvidia and AMD, allowing them to resume exports of advanced AI processors to China. This has been enabled by a new 15% revenue-sharing framework wherein these companies will direct a portion of earnings from Chinese sales back to the US government. This deal marks a profound transformation in American export policy that traditionally maintained strict controls on sensitive technology due to national security concerns, and it is particularly notable given the previous ban on such exports earlier this year.

President Trump's administration has expressed an inclination toward possibly expanding this arrangement to include additional semiconductor companies in the future. White House Press Secretary Karoline Leavitt highlighted its novelty by calling it a creative solution. Observers note that the approach signifies a shift toward a 'pay-for-play' model that would introduce financial elements to decisions that have historically been driven by security imperatives. This perspective suggests a potential redefinition of how the US balances its economic goals with national security.

Reactions have been sharply divided. Several lawmakers and experts warn about the potential erosion of security standards. Representative John Moolenaar cautioned that using export controls as monetary leverage might set a perilous precedent, while Representative Raja Krishnamoorthi voiced concerns that it may signal to China and allies that economic considerations could override security principles. Conversely, figures like Commerce Secretary Howard Lutnick argue that maintaining Chinese dependence on US technology could be beneficial, as the H20 chip is not among Nvidia's top products.

Critics further debate whether such an arrangement could legally constitute an export tax. Attorney Jeremy Iloulian points out the complexities in legally categorizing this revenue-sharing mechanism, hinting at potential ambiguities in its implementation. Meanwhile, industry analysts project that the requirement could impact the profitability of China-targeted processors, possibly slashing gross margins by up to 15 percentage points.

Despite these challenges, some perceive the agreement as a pragmatic adaptation to the increasing pressure on firms to remain competitive in China's vast market. Analysts like Sarah Kreps and Hendi Susanto view the deal as indicative of the administration's willingness to negotiate previously rigid policies, hinting at possible future arrangements of similar nature. As the boundaries between economic and security policies blur, this agreement underscores a potential new paradigm in the strategic navigation of global markets.

Sources: TechSpot, Reuters

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