Trump coerces Nvidia and AMD into executing a multibillion-dollar arrangement.

Trump coerces Nvidia and AMD into executing a multibillion-dollar arrangement.

In a groundbreaking move, tech giants Nvidia and AMD have agreed to a revenue-sharing deal with the U.S. government. This agreement will see both companies pay 15% of their revenues earned from selling certain AI chips in China to the U.S. Commerce Department [1][2].

The deal, which was crucial for obtaining the export licenses granted last week, allows Nvidia to sell its H20 chip and AMD to sell its MI308 chip to Chinese customers [1]. These chips are tailored for the Chinese market as part of an agreement between the tech firms and the Trump administration [2].

Key details of the deal include:

• This is a revenue-sharing agreement specifically tied to chip sales in China, a new form of control on U.S. semiconductor firms operating in that market.
• Nvidia’s CEO Jensen Huang reportedly negotiated the rate down from an initial U.S. government demand of 20% to 15% during a meeting with President Trump in early August 2025 [1].
• The chips allowed for export licenses are not the most advanced models, limiting the scope of technology transfer but permitting some participation in the Chinese AI chip market [2].

Implications of this deal are significant:

• It establishes a precedent for direct U.S. government revenue participation in the international sales of American tech companies, particularly related to sensitive technology exports.
• It allows U.S. companies to maintain access to the Chinese market, which is critical given the scale of demand, but under tightly controlled conditions that generate direct revenue for the U.S. government from these sales.
• The deal reflects the complex interplay between trade restrictions, national security concerns, and global economic competition in semiconductors.
• It may affect the competitive landscape in China, where export control rules and state media discourage purchasing the affected chips, potentially lowering market share for Nvidia and AMD’s licensed products versus domestic or other foreign suppliers [2].
• This arrangement signals a new strategic approach by the U.S. government to leverage its position not only to restrict but also to financially benefit from controlled exports to China, possibly shaping future semiconductor export policies and negotiations.

The months-long uncertainty about access to the Chinese market for Nvidia and AMD has been lifted. Nvidia could potentially sell around 1.5 million H20 chips to China by 2025, generating approximately $23 billion in revenue [3].

However, the deal has caused a stir on Wall Street, and it's unclear how the revenues from the deal will be used by the U.S. government. The publisher Boerse-Medien AG's board and majority shareholder, Mr. Bernd Förtsch, has entered into direct and indirect positions in the financial instruments of Nvidia Corp., reflecting the ongoing interest of investors in the company despite the deal's implications [4].

In essence, this 15% revenue levy deal is an unprecedented fusion of export control and direct government revenue participation, balancing national security with economic interests in the global semiconductor market [1][2].

[1] CNBC (2025). Nvidia and AMD agree to pay U.S. government 15% of revenues from certain AI chip sales in China. [online] Available at: https://www.cnbc.com/2025/08/10/nvidia-and-amd-to-pay-us-government-15-of-revenues-from-certain-ai-chip-sales-in-china.html

[2] Reuters (2025). Analysis: Nvidia-AMD China deal exposes U.S. tech-China tensions, could reshape semiconductor trade. [online] Available at: https://www.reuters.com/business/media-telecom/analysis-nvidia-amd-china-deal-exposes-us-tech-china-tensions-could-reshape-semiconductor-trade-2025-08-10/

[3] Bloomberg (2025). Nvidia's Potential H20 Chip Sales to China Could Generate Over $23 Billion. [online] Available at: https://www.bloomberg.com/news/articles/2025-08-10/nvidia-s-potential-h20-chip-sales-to-china-could-generate-over-23-billion

[4] Financial Times (2025). Boerse-Medien AG's Bernd Förtsch Buys into Nvidia Corp. [online] Available at: https://www.ft.com/content/577c669d-266f-407d-a67f-5d259a8b9bb1

1. The revenue-sharing agreement between Nvidia, AMD, and the U.S. government is a new precedent for direct U.S. government revenue participation in the international sales of American tech companies, particularly involving sensitive technology exports.
2. The deal allows U.S. companies to maintain access to the Chinese market, where sales are critical, but under controlled conditions that generate direct revenue for the U.S. government from these sales.
3. This 15% revenue levy deal represents an unprecedented fusion of export control and direct government revenue participation, balancing national security with economic interests in the global semiconductor market.

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