AI Chip Showdown: US Strikes a Deal with Nvidia and AMD

Hustler Words – The ongoing saga of AI chip sales to China has taken a dramatic turn. According to a report from the Financial Times, citing anonymous sources, Nvidia and AMD have reached an agreement with the U.S. government. In exchange for licenses to sell their high-end AI chips to China, both companies will remit 15% of their revenue generated from these sales back to the U.S. Treasury. This revelation shifts the narrative from a purely national security concern to one involving significant financial concessions.

The agreement reportedly involves Nvidia sharing revenue from its H20 AI chips sold in China, and AMD contributing a portion of sales from its MI308 chips. The U.S. government has already begun issuing the necessary export licenses, signaling a significant policy shift.

This development follows a turbulent period of restrictions and concessions. The Trump administration initially restricted sales of high-performance AI chips to China, later pausing the ban after Nvidia pledged a substantial $500 billion investment in U.S. data centers. Subsequently, Nvidia announced its intention to resume sales of its H20 chips to China, chips specifically designed for that market.

An Nvidia spokesperson stated, "We follow rules the U.S. government sets for our participation in worldwide markets. While we haven’t shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide."

U.S. Commerce Secretary Howard Lutnick linked Nvidia’s change of course to ongoing trade negotiations with China concerning rare-earth elements, crucial components in various technologies, including electric vehicle batteries.

However, the decision to approve these sales hasn’t been without its detractors. National security experts and former government officials voiced their concerns in a letter to Secretary Lutnick last month, urging a reversal of the policy. This complex situation highlights the delicate balance between national security interests, economic considerations, and the global competition in the rapidly evolving AI chip market. The 15% revenue-sharing agreement represents a novel approach, and its long-term implications remain to be seen.