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China-bound chip revenues with the U.S. government in exchange for export licenses, navigating complex trade restrictions.">
China, chips, semiconductors, export licenses, tariffs, Donald Trump, technology, trade war, revenue share">
Nvidia and AMD Secure China Chip Sales with Revenue-Sharing Agreement
Table of Contents
Published: October 26, 2023 | Updated: October 26, 2023
Illustration: A smartphone displaying the AMD logo alongside a computer motherboard. (Florence Lo | Reuters)
WASHINGTON D.C. – In an unprecedented move, Nvidia and Advanced Micro Devices (AMD) have reached an agreement with the U.S. government to share a percentage of revenues generated from specific chip sales to China. The deal, first reported by the Financial Times, grants both companies export licenses to continue selling critical components – Nvidia’s H20 and AMD’s MI308 – to the Chinese market despite escalating trade tensions.
Under the terms of the agreement, nvidia and AMD will relinquish 15% of the revenue derived from sales of the H20 and MI308 chips within china. This revenue will be directed to the U.S. government. The arrangement bypasses stricter export controls implemented to limit China’s access to advanced semiconductor technology, especially those with potential military applications. the licenses are reportedly valid for one year, requiring renewal and potential renegotiation of terms.
Trump’s Influence and shifting Trade Policy
The agreement underscores the evolving trade strategy of the U.S., particularly under the continued influence of former President Donald Trump.Last week, Trump publicly proposed a 100% tariff on all semiconductor imports unless companies establish manufacturing facilities within the United States. This latest deal appears to be a strategic exception to that policy, demonstrating the White House’s willingness to utilize targeted negotiations as a bargaining chip. Sources indicate that Nvidia CEO Jensen Huang met with Trump at Trump National Golf Club in Bedminster, New Jersey, on October 19th, 2023, to discuss the matter directly.
Why These chips Matter: H20 and MI308
The Nvidia H20 and AMD MI308 are high-performance GPUs (Graphics Processing Units) crucial for artificial intelligence (AI) growth and high-performance computing. These chips are essential for training large language models (LLMs) and powering advanced data centers. China’s access to these technologies is vital for it’s ambitions in AI, a sector where the U.S. is striving to maintain a competitive edge. the H20 is a modified version of Nvidia’s flagship H100 chip, designed to comply with U.S.export restrictions, while the MI308 is AMD’s competitor in the high-end AI accelerator market.
The Broader Context: Semiconductor Supply Chains and Geopolitics
This deal highlights the complex interplay between semiconductor supply chains,geopolitical competition,and national security concerns. The U.S. has been actively working to reshore semiconductor manufacturing through initiatives like the CHIPS and Science Act, signed into law in August 2022. this act provides $52.7 billion in subsidies to encourage domestic chip production. However, the agreement with Nvidia and AMD acknowledges the immediate need to maintain a flow of critical technology to China while the U.S. builds up its domestic capabilities. The move also comes amid increasing scrutiny of china’s technological advancements and concerns about its military modernization.
Nvidia, in a statement to the Financial Times, affirmed its commitment to adhering to U.S. government regulations regarding international market participation.
