Tech giants shell out billions to restart sales in China post tariff agreement
In a move that has sent shockwaves through the tech industry, Nvidia and AMD have agreed to pay a 15% share of their semiconductor sales in China to the US government. This revenue-sharing agreement, which allows these companies to resume the sale of powerful chips used in artificial intelligence to China, is a first in the realm of export controls.
The deal was finalized after Nvidia CEO Jensen Huang met with former President Donald Trump, who initially asked for a 20% cut but agreed to 15% after negotiation. This agreement marks a significant shift in US-China semiconductor trade policy, trading outright bans for a revenue-sharing approach to maintain leverage over China while still allowing US companies to compete in Chinese markets with certain controlled advanced AI semiconductor products.
This unprecedented revenue-sharing agreement applies to Nvidia's H20 AI chip and AMD's MI308 AI chip. The export licenses for these chips are granted conditional on this agreement. Treasury Secretary Scott Bessent has called this arrangement a "unique solution" and suggested it could serve as a model for revenue-sharing deals in other industries.
The funds collected from this agreement are intended to contribute directly to paying down the US national debt. There has been speculation about potentially channeling some funds back to taxpayers if the system proves successful.
This agreement comes at a time when US markets are anxious about a trade deadline for talks between Washington and Beijing. It remains to be seen how this move will impact the ongoing negotiations and the broader tech industry.
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Investing in the tech sector could potentially yield returns with the recent revenue-sharing agreement between Nvidia and AMD, benefiting from the sale of advanced AI semiconductors in China. This unique financial arrangement, intended to help pay down the national debt, could offer opportunities in the technology business.
The finance ministers of both countries should carefully consider the impact of this agreement on their respective industries and global trade relations, while allocating funds from the deal could influence future investment decisions in the business world.
