Increased Involvement of the US Government in Export Activities Possible
In a move that could potentially reshape the high-tech industry, the US government has entered into a unique agreement with chip giants Nvidia and AMD. This agreement, which involves the companies paying a 15% fee of their revenue from AI chip sales to China, could pave the way for other industries facing strict export controls due to national security concerns.
The agreement came about as a result of tightened rules for semiconductor sales to China, imposed by the Trump administration in the spring. Initially, these rules prevented the delivery of Nvidia's specially slimmed-down H20 systems to China. However, after persuasion by Nvidia CEO Jensen Huang, the delivery was allowed.
The tightened rules affected not only Nvidia but also other companies in the semiconductor and advanced electronics industries. The unique agreement between Nvidia and AMD could potentially be extended to manufacturers of high-performance processors, memory, and specialized computing hardware used in defense, telecommunications, and AI.
Telecommunications equipment companies, especially those producing 5G and beyond technologies, could also adopt similar pay-to-play or revenue-sharing export agreements. Aerospace and defense technology firms, which manufacture dual-use technologies combining commercial and military applications, often subject to export restrictions, might also consider this model. Advanced materials and nanotechnology companies, whose products have strategic military or industrial applications, could also be included.
This model presents a potential solution to maintain US influence over sensitive technologies while generating federal revenue. It allows American companies limited market access in countries like China, despite national security risks. However, the approach is unprecedented and controversial, raising constitutional questions and concerns about weakening export controls.
US Treasury Secretary Scott Bessent suggested the potential expansion of the agreement to other industries. The agreement between Nvidia and AMD, originally proposed to be a 20% fee by President Donald Trump, is currently being collected by the US government. The discussion around this agreement has been featured on US broadcaster Bloomberg TV.
As the world continues to navigate the complexities of global trade and national security, this agreement between Nvidia, AMD, and the US government could serve as a precedent for other industries facing similar geopolitical export constraints.
[1] Bloomberg News
[2] Reuters
[3] The Wall Street Journal
[4] The Verge
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