Nvidia & AMD to Pay 15% of China Chip Sales to US for Export Licenses

New Export License Policy

• 🇺🇸 The US government has implemented a new policy requiring Nvidia and AMD to pay 15% of their China chip sales revenue to secure export licenses.
• 💡 This is described as a new tax or a "restrictive covenant" on American companies seeking to sell chips in China.
• 🤝 The deal was reportedly negotiated directly by the President with Nvidia's CEO, Jensen Huang, who initially proposed 20% and settled on 15%.

Precedent and Future Implications

• 🚀 This move sets a significant precedent for how the US government might handle future export licenses and regulatory interactions with companies.
• ⚠️ Analysts raise concerns about this becoming a "slippery slope," questioning if other companies will be required to pay similar fees to sell into China or other regions.
• 💰 The President's approach is characterized as transactional, seeking a return for taxpayers, whether financial or through equity stakes.

Chip Specifics and Negotiations

• 🧐 The chips in question include the H20 (an older chip already available in China in different forms) and the more advanced Blackwell chip.
• 📉 For the Blackwell chip, the President indicated a willingness to authorize sales if it were degraded by 30% to 50%, but did not specify a revenue percentage for this.
• 📈 The policy is seen as a way to potentially bring back billions in revenue to the US, with estimates suggesting Nvidia could see a billion dollars kicked back to the US per quarter.

Broader Context and Intel's Meeting

• 📊 The policy is viewed in the context of the US government's broader transactional approach, similar to "golden share" deals.
• 🤝 Intel's CEO is scheduled to meet with the President, potentially to discuss similar arrangements or investment offers to align with the administration's goals.
• 🧰 Companies like Apple have previously presented "golden gifts" or "deal tchotchkes" to the President, highlighting his preference for such displays of engagement.