Nvidia and AMD to Remit 15% of China Earnings to the U.S. Amid Ongoing Trade Tensions

Chip manufacturers Nvidia and AMD have reached an agreement with the U.S. government to pay 15% of their semiconductor sales in China. This deal is crucial for both companies as it allows them to secure export licenses to the Chinese market, which is the second largest economy in the world. Nvidia has expressed its commitment to adhering to U.S. regulations while emphasizing the importance of maintaining America’s competitive edge in global technology markets.

Details of the Agreement

Under the terms of the agreement, Nvidia will remit 15% of its revenue from H20 chip sales in China to the U.S. government. Similarly, AMD will contribute the same percentage from its MI308 chip sales. This arrangement was first reported by the Financial Times and marks a significant step for both companies in navigating the complex landscape of U.S.-China trade relations. Nvidia has previously faced restrictions on selling its H20 chips to China due to security concerns, but recent developments suggest a potential easing of these restrictions. The H20 chip was specifically designed for the Chinese market following export limitations imposed by the Biden administration in 2023.

Nvidia’s Lobbying Efforts

Nvidia’s CEO, Jensen Huang, has been actively lobbying for the resumption of chip sales to China. His efforts included a recent meeting with former President Donald Trump, highlighting the urgency of the situation. Huang has stated that it is vital for the U.S. to avoid repeating past mistakes, such as losing its leadership in telecommunications. He believes that the U.S. artificial intelligence technology stack has the potential to become the global standard if the country can act swiftly and decisively.

Trade Relations Between the U.S. and China

The agreement comes at a time when trade tensions between the U.S. and China appear to be easing. Beijing has relaxed its controls on rare earth exports, while the U.S. has lifted restrictions on chip design software companies operating in China. In May, the two nations agreed to a 90-day truce in their ongoing tariff war, although no extension has been confirmed as the August 12 deadline approaches. High-level trade officials from both countries have met multiple times since the truce, indicating a willingness to negotiate and find common ground.

Investment Trends in the U.S. Tech Sector

As part of the broader tariffs policy, the U.S. government has been encouraging major companies to invest more domestically. Recently, Apple announced plans to invest an additional $100 billion in the U.S., complementing its previous commitment of $500 billion over the next four years. Similarly, Micron Technology has revealed plans for $200 billion in U.S. investments, which includes building a new manufacturing facility in Idaho. Nvidia has also pledged to invest up to $500 billion in AI servers in the U.S., aiming to create the first entirely American-made AI supercomputers. These investments reflect a growing trend among tech giants to bolster their presence in the U.S. market while navigating international trade complexities.

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