Mon, 11 Aug 2025

Mon, 11 Aug 2025 The US is taking a cut from chip sales to China - what does it mean?

Two top firms will give the US government 15% of profits from the sale of some advanced semiconductors in China, the BBC has been told.
Two US tech giants, Nvidia and AMD, will pay 15% of their revenue from selling certain advanced chips to China to the US government. This deal has been described as unusual, unprecedented, and worrying by industry watchers and experts. The news comes just months after the Trump administration lifted a ban on the sale of these high-end chips to China, citing national security concerns. However, this new agreement will now see the US government take a direct stake in the sales, sparking criticism that it is confusing and sends mixed signals to other US companies doing business with China. The advanced chips are used for AI applications, which are expected to drive significant growth in the global economy. Nvidia's H20 chip and AMD's MI308 chip were developed specifically for the Chinese market after the previous ban was imposed due to national security concerns. Trade expert Deborah Elms called the deal "bad" and said no US company has ever done anything like this before. Others argue that it may be part of Trump's ongoing tariff negotiations with China, where he has threatened 100% tariffs on foreign-made chips unless companies invest in the US. The agreement is seen as a boon for Nvidia and AMD, which have significant sales to China, but critics are concerned about the impact on their bottom line. The deal also raises questions about what message it sends to other US companies doing business with China, from Apple and Tesla to smaller firms. A US official said that the White House does not believe selling these chips will compromise national security, despite previous concerns. However, some lawmakers and experts have expressed worries that Beijing could use them to gain an advantage in AI and military applications. The deal is also seen as a win for China, which wants access to these advanced chips. Analysts expect the Chinese market to grow significantly this year, with investment in AI expected to reach $100 billion. The US government may make up to $2 billion from chip sales to China under this agreement.
  >>