To Re-enter the Chinese Market, NVIDIA and AMD Reach Agreement with Trump
In order to return to the Chinese market, NVIDIA and AMD have reportedly reached an agreement with Trump. That is, as long as they can export downgraded AI chips to China, they are willing to pay 15% of their revenue in China to the U.S. government. Trump also personally confirmed this news at a press conference on August 11, emphasizing that this is a “small agreement” he negotiated with the two companies, aimed at balancing national security and economic interests. However, such a “chip tax” has raised questions about its constitutionality, and the Chinese government may not be willing to accept it.
Trump Confirms Agreement Details: NVIDIA and AMD Pay 15% Revenue for Export Rights
During the press conference, Trump stated that NVIDIA has agreed that if it can export the H20 chip to China, it will pay 15% of its revenue from that product in China to the U.S. government. AMD will also make similar arrangements for its MI308 chip. Trump revealed:
“This is a small agreement where I originally called for 20%, and we finally settled on 15%.”
Trump emphasized that this agreement provides both companies with the opportunity to ship downgraded versions of AI chips to China, opening up the market for them and allowing the U.S. government to actually receive financial returns.
U.S. Eases Revenue Sharing for Downgraded Chip Exports, China Responds with Skepticism
The U.S. government has been very concerned over the past few years that China could use high-end AI chips for military purposes, leading to strict export restrictions. As a result, NVIDIA and AMD have been forced to produce “downgraded” chips for export. The Trump administration chose to relax some export restrictions, with the condition that the two companies must pay a sort of revenue-sharing tax. However, experts point out that this “special export tax” lacks congressional authorization and may raise constitutional concerns. White House officials downplayed that the H20 is not the latest, most powerful chip.
However, China’s response to this agreement has been lukewarm. A Weibo account related to China’s state media CCTV, “Yuyuantian,” criticized the H20 chip on August 10 as “flawed and inefficient,” further implying, “when the H20 is neither environmentally friendly, advanced, nor safe, we as consumers can certainly choose not to buy.” Observers believe that China may find it difficult to accept a politically charged arrangement like the “chip tax.”
U.S. Could Earn Billions in Revenue, Uncertainty Remains for Both Chipmakers’ Return to China
According to NVIDIA’s Q1 financial report, prior to U.S. export restrictions, NVIDIA’s sales of the H20 chip in that quarter were originally $4.6 billion, with an additional $2.5 billion in shipments halted. Assuming there were no export restrictions, the revenue for that quarter could have reached $7 billion. Based on Trump’s claim of collecting 15% in revenue sharing, the U.S. government could receive $1.05 billion.
Next is AMD, with Morgan Stanley estimating that AMD could achieve $3 to $5 billion in revenue in the Chinese market this year. However, as Chinese companies like Huawei have also launched local alternative chips like Ascend, whether AMD can truly return to its peak revenue remains uncertain.
Both NVIDIA and AMD have stated that even if the chips can be exported, it will take several months to restore production capacity, and whether the Chinese market will be willing to purchase these “downgraded” chips is also hard to say.
Trump Hints at Considering Allowing Downgraded Blackwell, Experts Worry About National Security Stance Being Weakened
In addition to the H20, Trump also revealed that he may consider allowing NVIDIA’s flagship chip Blackwell to be exported to China in the future, provided its performance is reduced by 30% to 50%. He stated:
“There may be an agreement in the future regarding some performance adjustments for Blackwell, and I will meet with Jensen to discuss this.”
In response, Jacob Feldgoise, a researcher at the Washington think tank CSET, criticized that such a deal is essentially a trade of money for permission, which would undermine the legitimacy of the U.S. government’s past national security claims. He further pointed out that such a transaction has never occurred in the field of export controls.
NVIDIA and AMD both emphasized that they are exporting in accordance with the law and indicated that China already has chip self-sufficiency capabilities. However, there are concerns in the industry that China may use cybersecurity as a pretext to exert reverse pressure on the U.S., to avoid appearing overly dependent on American-made chips.
After the news broke, both companies’ stock prices fell slightly by about 0.3%.
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