Nvidia and AMD Agree to Revenue Share with US for China Chip Sales Amid Trade Tensions

What's Happening?

Nvidia and AMD have reached an agreement with the U.S. government to pay 15% of their revenues from semiconductor sales to China in exchange for export licenses. This arrangement aims to maintain trade ties while bolstering America's AI business dominance. The deal follows a meeting between Nvidia CEO Jensen Huang and President Trump, allowing the sale of Nvidia's H20 chips and AMD's MI308 chips to China. Despite the agreement, concerns persist over the security of these chips, with Chinese state media warning of potential backdoors. The deal comes as the U.S. and China approach a deadline for a trade truce, with technology being a key issue in negotiations.

Why It's Important?

The agreement highlights the complex interplay between trade, technology, and national security. By allowing chip sales to China, the U.S. aims to maintain its competitive edge in AI while addressing trade imbalances. However, the security concerns raised by China could impact the success of this venture and influence future trade negotiations. The deal underscores the strategic importance of semiconductor technology in global trade and national security, with potential implications for U.S.-China relations and the broader tech industry. Companies like Nvidia and AMD must navigate these geopolitical challenges while pursuing business opportunities in international markets.

What's Next?

As the trade truce deadline looms, further negotiations between the U.S. and China could lead to adjustments in export controls and trade policies. The outcome of these talks will influence the future of semiconductor sales and technology exchange between the two nations. Nvidia and AMD may need to address security concerns to ensure compliance with international standards and maintain market access. The evolving trade landscape could prompt other tech companies to reassess their strategies and partnerships in China. Policymakers and industry leaders will continue to monitor developments to safeguard national interests and promote economic growth.