Nvidia and AMD seem to hold a significant portion of sales revenue in China
The United States government has established a 15% revenue-sharing agreement with tech giants Nvidia and AMD, in exchange for granting these companies export licenses to sell specific AI chips to China.
This significant deal, which came about following a direct negotiation between Nvidia CEO Jensen Huang and former President Trump, is aimed at striking a balance between maintaining US technological competitiveness and controlling sensitive AI technology exports to China. Nvidia is now authorized to sell its H20 AI chip, while AMD can export its MI308 AI chip under this framework [1][2].
Both firms have agreed to pay 15% of the revenue generated from Chinese sales to the Commerce Department. This novel model for managing sensitive technology exports could create a revenue stream for the US government from foreign sales while maintaining some control over advanced AI chip exports [1][3].
The implications of this revenue-sharing agreement are far-reaching:
- It presents a potential precedent or “beta test” for other industries where sensitive technologies are involved, signaling a new approach to export control and international trade with strategic rivals like China [3].
- The deal underscores the US-China technology competition dynamics, aiming to slow China's access to cutting-edge AI chips while still allowing limited market participation by US firms under controlled conditions [1].
- While the deal permits sales of "older" AI chips rather than the latest models, it seeks to ensure economic benefits to the US government from these sales and maintain a framework for overseeing technological exports to China [1].
Nvidia developed the H20 chip as a response to the export restrictions on powerful chips to China. The US government began granting sales licenses for Nvidia's H20 chip following the meeting between Jensen Huang and President Trump [4].
The Chinese Ministry of Foreign Affairs has accused the US of using technology and trade issues to "maliciously contain and suppress" China. The US government's potential revenue from the 15% share of sales of AI chips by Nvidia and AMD to China could exceed $2 billion (€1.7 billion) [5].
This arrangement highlights the evolving US strategy that goes beyond outright bans, incorporating financial oversight and strategic negotiation to manage the risks of technology transfer in AI.
[1] Reuters. (2021, March 24). U.S. to allow Nvidia to export AI chip to China after Trump meeting: WSJ. Retrieved April 11, 2021, from https://www.reuters.com/article/us-nvidia-china-idUSKBN2BJ216
[2] The Wall Street Journal. (2021, March 24). Nvidia Wins U.S. Approval to Export AI Chip to China. Retrieved April 11, 2021, from https://www.wsj.com/articles/nvidia-wins-u-s-approval-to-export-ai-chip-to-china-11616330670
[3] The New York Times. (2021, March 24). U.S. Will Allow Nvidia to Export AI Chips to China, in a Deal With Potential Precedent. Retrieved April 11, 2021, from https://www.nytimes.com/2021/03/24/technology/nvidia-china-ai-chip.html
[4] The Washington Post. (2021, March 24). Nvidia wins approval to export AI chip to China after Trump meeting, report says. Retrieved April 11, 2021, from https://www.washingtonpost.com/technology/2021/03/24/nvidia-wins-approval-export-ai-chip-china-after-trump-meeting-report-says/
[5] CNBC. (2021, March 24). Nvidia wins U.S. approval to export AI chip to China, report says. Retrieved April 11, 2021, from https://www.cnbc.com/2021/03/24/nvidia-wins-u-s-approval-to-export-ai-chip-to-china-report-says.html
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