Nvidia & AMD's 15% China AI Chip Revenue Deal with US Government

Unprecedented Revenue-Sharing Deal

• 🤝 Nvidia and AMD have reportedly agreed to a deal with the US government where they will pay 15% of revenue from specific AI chip sales to China.
• 💡 This arrangement is described as a quid pro quo: export licenses for certain chips in exchange for a share of future revenues.
• ⚠️ The chips in question, Nvidia's H20 and AMD's MI308, were previously banned or required export licenses.

Implications and Concerns

• ⚖️ Experts question the legality of the deal, suggesting it could be construed as an unconstitutional export tax.
• 📈 The market views the deal positively as it allows companies to access the Chinese market, which is crucial for AI research and development.
• 🚫 However, there's a cautionary note due to the significant levy on billions of dollars in potential revenue.

Geopolitical Context and Future Outlook

• 🇺🇸 This deal is seen as part of a broader transactional policy approach by the Trump administration, potentially influencing other industries.
• 🚀 The US aims to maintain its technological edge in AI and automation, while China seeks to develop its domestic champions like Huawei.
• 🇨🇳 China's reaction is uncertain, with concerns about national security risks from US technology and potential resistance to ceding market momentum to domestic companies.
• 🧩 The arrangement highlights the complex interplay between US-China trade relations, technology export controls, and domestic industrial policy.