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Nvidia, AMD to give U.S. government 15% of revenue from two AI chips exported to China: Report
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00:07:19

Nvidia and AMD to Pay US Government 15% of Revenue from China AI Chip Exports

Recent reports indicate Nvidia and AMD have agreed to surrender 15% of revenue from AI chip exports to China in exchange for export licenses. This controversial arrangement raises fundamental questions about national security, industrial policy, and government-corporate relations.

The Core Agreement

Under the reported terms:

  • Nvidia and AMD will pay 15% of revenue generated from two specific AI chips exported to China
  • In return, the U.S. government will grant export licenses for these semiconductors
  • Nvidia's H20 chip alone could generate billions in revenue, making the government's share substantial

The deal follows a meeting between Nvidia CEO Jensen Huang and the U.S. President, though neither company nor government officials have formally confirmed the arrangement.

Contradictions in National Security Policy

Analysts highlight inherent contradictions in the agreement:

Security vs. Revenue: If chip exports genuinely threatened national security, accepting payment doesn't mitigate the risk. This undermines the credibility of security-based export controls.

Competitive Dilemma: The U.S. may argue that allowing limited chip sales prevents China from dominating AI development. However, taxing these exports could hinder U.S. companies' ability to outcompete Chinese rivals.

Broader Policy Concerns

The selective application of this revenue-sharing model raises multiple red flags:

  • Industry Targeting: Why exclusively target chipmakers? Will other sectors face similar demands for market access?
  • Industrial Policy Conflict: Republicans traditionally oppose government micromanagement of business, while Democrats may object to corporate revenue diversion.
  • Reinvestment Impact: Conservatives argue the 15% fee deprives companies of capital that could fuel innovation and maintain U.S. technological leadership.

Legal and Ethical Precedents

The arrangement sets concerning precedents:

➤ Pay-to-Play Dynamics: Resembles a "payoff" system where companies buy regulatory approval, contradicting anti-corruption principles like the Foreign Corrupt Practices Act.

➤ Legal Vulnerability: While companies could theoretically challenge the requirement, they're unlikely to sue due to the "85% vs. 0%" calculation. This creates policy-by-coercion risks.

Unresolved Political Tensions

Both sides of the political spectrum face contradictions:

Political Perspective Revenue Benefit Policy Conflict
Conservative Reduces deficit without broad tax increases Violates free-market principles and enables industrial micromanagement
Liberal Generates funds for social programs or AI preparedness Selective corporate taxation lacks fairness and undermines security arguments

The Fundamental Question

As one analyst framed the dilemma: "If the goal is revenue, raise corporate taxes. If it's security, ban exports. Blurring the lines creates policy incoherence and sets dangerous precedents."

With billions at stake and no official confirmation, this arrangement remains in limbo – reflecting broader tensions in U.S.-China tech policy.

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