AI chips for China: AMD and Nvidia share revenue with the US government
Last week, the US government granted the first licenses for the export of Nvidia GPUs to China. In return, there is a profit share.
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Nvidia and AMD have agreed to give the US government a lump sum of 15 percent of the revenue that both companies generate from the sale of AI chips in China. This was reported unanimously by several US media outlets after the Financial Times first made the “unusual agreement” public. According to the British newspaper, the agreement has no precedent in the history of the United States; never before has a US company agreed to give up part of its revenue in return for export licenses. The US Bureau of Industry and Security (BIS) granted the licenses for the export of Nvidia's H20 accelerators to China just last week.
“Next F35 against the Commission?”
The granting of the export licenses to the chipmakers had already met with criticism before the extraordinary details of the deal became public. As the Financial Times recalls, experts believe that the AI chips could help the Chinese military and undermine the US competitive advantage in the field of AI. The fact that the US government is now also paying for this is likely to cause particular joy in China, quotes an expert. “What's next, a license for Lockheed Martin to sell F-35 fighter jets to China for a 15 percent commission?” asks Liza Tobin, who once advised US President Donald Trump on national security issues.
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Nvidia has repeatedly complained that the company would lose billions in sales due to export restrictions for the H20 accelerators. The GPU was introduced back in 2023 as a slowed-down version of the fastest AI accelerator at the time, the H100, specially developed for China and is still based on the Hopper architecture. With the current architecture called Blackwell, Nvidia has a significantly faster and more efficient one. The New York Times reports that participation in the H20 revenue could bring the Trump government two billion US dollars this year. AMD could add an amount in the triple-digit millions.
Nvidia & Co. have only been allowed to sell lame GPU accelerators to China since 2022. After Nvidia initially used a loophole to be able to export stripped-down versions of its AI accelerators there, the then US government under Joe Biden also banned these AI accelerators, known as A800 and H800, for China in 2023. However, the H20 chip, which is based on the same architecture, was specially adapted to the US export restrictions. In April, the new Trump administration then also banned the sale of these adapted AI accelerators for China. Most recently, Nvidia CEO Jensen Huang lobbied for the re-release, and now it is becoming increasingly clear what was necessary for his success.
(mho)
