"US Government Profits from AI Chip Sales to China: NVIDIA and AMD Agree to Hand Over 15% of Revenue"
In a move that has sent shockwaves through the tech industry, the US government has negotiated an unprecedented deal with NVIDIA and AMD. The companies will be required to pay a 15% royalty on the revenue from sales of specific AI accelerators to China as a condition to ease export restrictions imposed under national security concerns.
This deal, brokered by the Trump administration, marks a novel approach in US-China tech policy, as it mixes national security with direct monetary gain. However, legal experts have raised concerns that this arrangement could violate constitutional rules on export taxes and undermine the legitimacy of US tech export controls.
The implications of this agreement are significant and multifaceted. Critics argue that it may weaken US global alliances and accelerate China's semiconductor self-reliance efforts. Long term, this could set a precedent for extended royalty-like fees on other high-tech exports and damage US credibility in global tech diplomacy.
China has responded by designating Nvidia’s H20 AI accelerators as strategic and pausing new purchases. This move could potentially boost domestic Chinese chipmakers despite challenges they face with performance and ecosystem maturity.
US Rep. Raja Krishnamoorthi, the ranking member of the House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party, has released a statement expressing concern about the 15% trade deal. He warns that putting a price on national security concerns may signal to China and allies that American national security principles are negotiable for the right fee.
The long-term future of the 15% kickback on select NVIDIA and AMD AI chips remains uncertain. Market reactions have been cautious given production delays and increasing Chinese competition. As the situation unfolds, it's clear that this agreement reflects a high-stakes geopolitical and economic gamble to maintain US technological advantage and fiscal benefit from AI hardware sales to China.
Sources: 1. Reuters 2. The Verge 3. Bloomberg 4. CNET
- The negotiation could potentially impact the global tech industry, as it sets a precedent for charging royalty on specific hardware, such as Xbox gaming consoles, which also use AI technology.
- Alternatively, the US government could consider implementing similar royalty-like fees on other office hardware, like desktop computers that run on Windows, to protect national security interests.
- Meanwhile, in the realm of general news and crime-and-justice, cybersecurity experts have warned that this deal could create a vulnerability in the national security of countries that rely on AI technology, potentially paving the way for cybercrime.
- Interestingly, some tech enthusiasts might debate whether this move would impede the expansion of the laptop market, especially models that cater to the needs of home-based workers, given the uncertainty it brings to the export restrictions.
- Consequently, the tech industry is closely monitoring the situation, with scope for the Royalty agreement to influence not only the future of AI and hardware manufacturing but also broader geopolitical and economic relations.
