Nvidia and AMD to pay 15% of China chip sales revenues to the U.S. government, FT reports - CNBC

NVIDIA and AMD Agree to Share Revenues with US Government in China

In a significant development that highlights the ongoing tensions between the United States and China, NVIDIA and Advanced Micro Devices (AMD) have agreed to give the U.S. government a share of revenues from certain chips sold in China.

According to a report by the Financial Times, the two technology giants have reached an unprecedented arrangement with the US Department of Commerce, which will see them split revenue from the sale of specific chips in the Chinese market. This move is seen as a significant concession on the part of the companies and a sign of their willingness to cooperate with the US government in its efforts to restrict Chinese tech firms' access to advanced technology.

Background

The agreement comes at a time when tensions between the US and China are running high, particularly with regards to trade and national security. The US has imposed tariffs on a range of Chinese goods and has restricted Chinese companies from accessing certain technologies that could be used for military or surveillance purposes.

In recent months, there have been reports that the US government is seeking to restrict the sale of advanced semiconductors to China, with some sources suggesting that this could include chips from NVIDIA and AMD. The two companies are among the leading suppliers of semiconductors in the world and their products are used in a wide range of applications, including smartphones, laptops, and data centers.

Details of the Agreement

While the exact details of the agreement have not been made public, sources close to the matter have confirmed that NVIDIA and AMD will split revenue from the sale of certain chips in China. The companies will reportedly retain ownership of their intellectual property and will continue to supply chips to Chinese customers, but they will also be required to provide a share of their revenue to the US government.

The agreement is seen as a significant concession on the part of NVIDIA and AMD, which have historically been opposed to restrictions on their sales in China. However, the companies are likely to see this as a necessary step to avoid more severe penalties from the US government.

Implications

The implications of this agreement are far-reaching and could have significant consequences for the technology industry. On the one hand, it could mark a new era of cooperation between the US government and major tech firms in China. On the other hand, it could also be seen as a sign that these companies are willing to compromise their business interests in order to avoid more severe penalties.

The agreement is also likely to have significant implications for Chinese companies that rely on NVIDIA and AMD chips. These companies will need to find alternative suppliers if they want to continue accessing advanced technology, which could put them at a competitive disadvantage.

Potential Backlash

There is already potential for backlash from China, with some officials expressing opposition to the agreement. The Chinese government has long been critical of US attempts to restrict its access to advanced technology and this agreement is likely to be seen as another example of American overreach.

The Chinese government may respond by imposing countermeasures on NVIDIA and AMD, such as restrictions on their sales in China or even bans on certain products. This could have significant consequences for the companies involved and could also lead to further tensions between the US and China.

Global Implications

This agreement is not just a domestic issue for the US but also has global implications. It marks a shift in the balance of power between the US and China, with the US government now exerting greater control over the flow of technology to Chinese companies.

The implications are far-reaching and could have significant consequences for the technology industry as a whole. As other countries look on, they may be forced to re-evaluate their own policies towards Chinese tech firms and consider whether they need to take more drastic action.

NVIDIA and AMD's Response

NVIDIA and AMD have yet to comment publicly on the agreement, but sources close to the matter have confirmed that the two companies are willing to cooperate with the US government in this regard. The companies will likely see this as a necessary step to avoid more severe penalties and will be eager to get back to business as usual.

Conclusion

The agreement between NVIDIA and AMD to share revenues from certain chips sold in China is a significant development that highlights the ongoing tensions between the US and China. While the exact details of the agreement have not been made public, it is clear that this move marks a shift in the balance of power between the two countries.

As the technology industry continues to grapple with the implications of this agreement, one thing is clear: the US government is willing to take bold action to protect its national interests and will not hesitate to impose restrictions on Chinese tech firms. The question now is how NVIDIA and AMD will navigate these changing circumstances and what consequences will follow.

Timeline of Events

• Recent months: Tensions between the US and China have run high, particularly with regards to trade and national security.
• Reports emerge: There have been reports that the US government is seeking to restrict the sale of advanced semiconductors to China, including chips from NVIDIA and AMD.
• Agreement reached: NVIDIA and AMD agree to share revenues from certain chips sold in China with the US government.
• Details revealed: Sources close to the matter confirm that the two companies will split revenue from the sale of specific chips in China.
• Global implications: The agreement marks a shift in the balance of power between the US and China, with significant consequences for the technology industry.

Key Players

• NVIDIA: One of the leading suppliers of semiconductors in the world, NVIDIA is a major player in the technology industry.
• AMD: Another leading supplier of semiconductors, AMD has a long history of producing high-quality chips for a range of applications.
• US Department of Commerce: The US government agency responsible for regulating trade and commerce with China.
• Chinese Government: The Chinese government has long been critical of US attempts to restrict its access to advanced technology.

Related Stories

• US-China Trade Tensions: A rundown of the ongoing tensions between the two countries, including tariffs and restrictions on Chinese tech firms.
• Semiconductors in China: An exploration of the role of semiconductors in China's economy and their potential impact on the country's technology industry.

What's Next?

The implications of this agreement are far-reaching and could have significant consequences for the technology industry. As other countries look on, they may be forced to re-evaluate their own policies towards Chinese tech firms and consider whether they need to take more drastic action.

In the coming weeks and months, we can expect to see further developments in this story as NVIDIA and AMD navigate the changing landscape of global trade and commerce. One thing is clear: the US government will continue to exert pressure on Chinese tech firms to restrict their access to advanced technology.

Final Thoughts

The agreement between NVIDIA and AMD to share revenues from certain chips sold in China marks a significant development in the ongoing tensions between the US and China. As we move forward, it's essential to consider the implications of this agreement and how it may shape the future of global trade and commerce.

In a rapidly changing world where technology is playing an increasingly important role, companies like NVIDIA and AMD must be prepared to adapt to new circumstances and navigate complex regulatory environments.

Sources

• Financial Times
• Bloomberg
• Reuters