U.S. Authorities to Seize a Portion of Nvidia and AMD Artificial Intelligence Chip Revenues Destined for China
In a surprising turn of events, the Trump administration has agreed to a financial agreement that allows Nvidia and AMD to sell some of their older-generation artificial intelligence (AI) chips to China, with the U.S. government receiving a 15% cut of the revenue from these sales.
The decision, which was described by three people familiar with the deal who spoke anonymously because they didn't have permission to discuss it publicly, comes as a dramatic about-face by the Trump administration, which had banned the sales of these chips to China in April due to national security concerns.
The agreement, worth more than $2 billion according to estimates, was persuaded by Nvidia's CEO, Jensen Huang, who argued that a ban would hurt U.S. tech companies and allow Huawei to dominate the Chinese market. The deal involves selling older-generation chips, which President Trump justified by saying that China already possesses similar or equivalent chips in different forms or combinations.
The Commerce Department began granting licenses for AI chip sales two days after Huang met with President Donald Trump at the White House and agreed to give the federal government its 15% cut. However, the Trump administration continues to prevent China from buying Nvidia's most advanced AI chips.
The deal has caused immediate outcry among national security experts who have been opposed to AI chip sales to China. They argue that the deal may encourage Beijing to pressure other companies to make similar arrangements to loosen restrictions on other technology.
In response to these concerns, Commerce Secretary Howard Lutnick stated that the goal is to stay one step ahead of China by selling them less advanced chips. Nvidia, for its part, has published a blog stating that its AI chips don't have back doors and condemned a congressional effort to pass the Chip Security Act.
The group of national security officials who wrote a letter to the administration, calling the policy change a strategic misstep that endangers the U.S.'s economic and military edge in artificial intelligence, continues to express their concerns. The deal comes a month after Nvidia received permission to sell a version of its artificial intelligence chip called H20 to China. AMD, which also had its sales to China banned in April, is expected to follow suit.
The ongoing debate about the national security implications of the deal is evident, as no clear updated evaluation from the Commerce Department has been released since the original ban. The deal raises questions about the future of AI technology exports and the balance between economic interests and national security concerns.
- In an attempt to alleviate national security concerns, the Commerce Department is allowing Nvidia and AMD to sell older-generation AI chips to China, keeping a 15% share of the revenue for the U.S. government.
- The Trump administration's decision to permit these AI chip sales is a significant policy change, following private discussions between President Trump and Nvidia's CEO, Jensen Huang.
- Business leaders in the realm of technology and real estate, such as Nvidia, are expressing confidence in the security of their AI chips, having published statements to that effect, while some national security experts remain skeptical about the deal's potential implications.
- Amid this ongoing debate, the future of artificial-intelligence technology exports is being questioned, as stakeholders grapple with the delicate balance between economic interests and national security concerns.
