NVDA and AMD have struck a deal to give 15% of their China chip revenue to the U.S. government
NVDA and AMD have struck a deal to give 15% of their China chip revenue to the U.S. government, according to the FT.
According to Reuters, Nvidia and AMD have agreed to give 15% of their China chip revenue to the U.S. government as part of an arrangement with the Trump administration to obtain export licenses for their semiconductors.
Most recently, US President Donald Trump has announced plans for a 100% tariff on imported semiconductors, though with exemptions for companies that commit to manufacturing in the US.
This has sparked discussion and some uncertainty, but major players like Taiwan Semiconductor Manufacturing Co. (TSMC), Samsung, and SK Hynix, which have already committed or made significant investments in US manufacturing facilities, appear to be exempted. SMIC, China’s largest chipmaker, anticipates limited impact, citing strong domestic demand and preparations among overseas clients.
The Financial Times reported on Friday that 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 licences for AMD’s China chip. The quid pro quo arrangement is unprecedented. According to export control experts, no US company has ever agreed to pay a portion of their revenues to obtain export licences.
China raised additional duties on U.S. goods to 125% in April after Trump effectively raised tariffs on Chinese goods to 145%. On Wednesday Trump vowed a tariff of about 100% on imports of semiconductors, but excluded companies manufacturing in the U.S. or which have committed to do so.
SMIC, which does not have manufacturing in the United States, was blacklisted by the U.S. commerce department in 2020.
China is its dominant market, contributing 84% of second- quarter revenue, flat with the first, while the U.S. made up 12.9%, up slightly from 12.6%.
SMIC’s second-quarter revenue rose 16.2% on the year to $2.2 billion. Its profit attributable to owners declined 19.5% to $132.5 million, missing analysts’ estimates of $183.35 million, according to LSEG data.
The Commerce Department started issuing licenses to Nvidia to export its H20 chips to China last week, removing a significant hurdle to the artificial intelligence bellwether’s access to a key market.
The U.S. last month reversed an April ban on the sale of the H20 chip to China. The company had tailored the microprocessor specially to the Chinese market to comply with the Biden-era AI chip export controls.
