You want access to China to sell A.I. chips? NVDA & AMD, Pay Up!

Nvidia and AMD have agreed to give the US government 15% of the revenues from chip sales in China, as part of an unusual arrangement with the Trump administration to obtain export licenses for the semiconductors. The two chipmakers agreed to the financial arrangement as a condition for obtaining export licences for the Chinese market that were granted last week. The Commerce department started issuing H20 export licences on Friday, two days after Nvidia chief executive Jensen Huang met President Donald Trump. The US official said the administration had also started issuing licenses for AMD’s China chip.

This arrangement is unprecedented. No U.S. company has ever agreed to pay a portion of their revenues to obtain export licences. But the deal fits a pattern in the Trump administration where the president urges companies to take measures, such as domestic investments, for example, to prevent the imposition of tariffs in an effort to bring in jobs and revenue to America.

This has never been done before and I must admit, this is impressive on the part of President Trump. That 15% for sure will go towards paying down our $37 Trillion in debt! I can not see why anyone would have an issue with this deal. I have always said, it’s really key for U.S. chip companies to work with China but not only for revenue reasons. It is crucial for U.S. to know exactly what the Chinese are doing. You want to have your “enemies” close to you. It’s no secret China has been stealing U.S. chip technology. With this deal, U.S. will have a better hold on controlling that.

We also much touch on the way this administration is conducting business. This is basically a tariff on NVDA & AMD. A tariff that they are happy to pay. This is a very business-minded, transactional approach to handling these chip exports to China. All parties are satisfied. NVDA and AMD get the access they need. China receives U.S. chips instead of stealing them. Lastly, the U.S. gov’t receives revenue from both chipmakers to 1) Pay off debt. 2) Keep tabs on China and make U.S. their major supplier of chips.

Let’s see how this all plays out!