U.S. set to collect 15% of revenues from China-sold chip products manufactured by Nvidia and AMD, claims media reports
Nvidia and AMD Agree to Revenue-Sharing Deal with U.S. Government for Chinese Chip Sales
In a groundbreaking move, Nvidia and AMD have agreed to a revenue-sharing deal with the U.S. government, under which they will pay 15% of their semiconductor chip sales revenue in China to the U.S. government. This arrangement applies to Nvidia's H20 accelerator chips and AMD's MI308 processors, both designed to comply with U.S. export controls while allowing access to the Chinese market.
The deal, initiated under the Trump administration, is a middle ground approach, permitting sales while the U.S. government takes a direct financial cut. The revenue collected is reportedly aimed at helping pay down the national debt, with potential for further distribution to taxpayers if the program succeeds.
The export of the H20 chip, a microprocessor designed for the Chinese market, has been a significant hurdle that has now been removed. The Commerce Department has started issuing licenses for Nvidia to export its H20 chips to China, following the U.S. government's reversal of an April ban on the sale of the H20 chip to China in the last month.
Nvidia tailored the microprocessor specifically for the Chinese market to comply with the Biden-era AI chip export controls. However, the export of the MI308 chip from AMD is also subject to these controls.
Nvidia's positive news about accessing the Chinese market has had a positive impact on the stock market, specifically the Nasdaq, which ended at a record high. Jensen Huang, CEO of Nvidia, compared using AI to consulting several doctors to validate a medical diagnosis.
The U.S. government has set rules for Nvidia's participation in worldwide markets. Notably, the export of the H20 chip is now subject to the Biden-era AI chip export controls. AMD did not respond to a request for comment regarding the situation.
Experts have debated the agreement's implications, warning it could undermine the traditional national security rationale behind export controls since it introduces a financial quid pro quo. Treasury Secretary Scott Bessent described the revenue-sharing model as a "beta test" that could be expanded to other industries.
This business news comes from the United States of America.
- The revenue-sharing deal between Nvidia and AMD for their semiconductor chip sales in China could potentially be expanded to other industries, as suggested by Treasury Secretary Scott Bessent, indicating a potential fusion of the finance and technology industries.
- The U.S. government's revenue-sharing agreement with Nvidia and AMD for their chip sales, such as the H20 accelerator chips and AMD's MI308 processors, signals a shift in the finance sector, where companies now include a portion of their earnings towards fulfilling government obligations.
- The growth of the Defi (Decentralized Finance) market, with its focus on blockchain technology and digital assets, could become a subject of interest for the U.S. government, given the potential for a revenue-sharing model, as demonstrated by the agreement with Nvidia and AMD.
