tricky situation<\/a>, balancing Washington and Beijing\u2019s interests as both countries vie for AI dominance. <\/p>\n\u201cWe follow rules the U.S. government sets for our participation in worldwide markets,\u201d an Nvidia spokesperson said in a statement. \u201cWhile we haven\u2019t shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide.\u201d <\/p>\n
\u201cAmerica cannot repeat 5G and lose telecommunication leadership,\u201d the spokesperson added. \u201cAmerica\u2019s AI tech stack can be the world\u2019s standard if we race.\u201d <\/p>\n
Nvidia dominates the market for GPUs, the chips powering the AI boom, fueling the company\u2019s rapid growth over the past few years. Last month, it became the first company in the world to reach a market capitalization of $4 trillion.<\/p>\n
AMD holds a much smaller share of the market, but it remains a key player. <\/p>\n
The agreement appears to remove a major impediment for both companies. Nvidia said earlier this year it incurred $4.5 billion in charges associated with the chip restrictions in the first quarter and expected an $8 billion sales hit in the second quarter. AMD forecast a $1.5 billion hit to revenue this year. <\/p>\n
The deal represents a notable shift in how the government approaches export controls. <\/p>\n
\u201cIt\u2019s quite extraordinary because it turns the export control function of the government into a money-raising proposition, and that\u2019s never happened before,\u201d Hufbauer said. <\/p>\n
The U.S. government is barred from imposing taxes on exports under both the Constitution and federal law. <\/p>\n
\u201cIn addition to the policy problems with just charging Nvidia and AMD a 15% share of revenues to sell advanced chips in China, the US Constitution flatly forbids export taxes,\u201d Peter Harrell, a nonresident fellow at the Carnegie Endowment for International Peace, wrote on social media.<\/p>\n
\u201cIn addition to the Constitution, 50 USC 4815(c) expressly prohibits fees for export control licenses,\u201d added Harrell, who served as senior director of international economics in the Biden administration. <\/p>\n
It\u2019s unclear whether the 15 percent cut from Nvidia and AMD\u2019s revenues would count as an export tax, because \u201cit looks like the companies just decided to make this payment in order to further their business,\u201d Hufbauer noted. <\/p>\n
It\u2019s also not entirely clear who would have standing to challenge the move in court \u2014 an outcome Hufbauer suggested is ultimately unlikely. <\/p>\n
Even so, the agreements with Nvidia and AMD are likely to face pushback. <\/p>\n
The Trump administration\u2019s decision to allow Nvidia to resume H20 sales to China has already been a source of concern among both Democrats and Republicans, who have warned that it could boost Beijing\u2019s AI capabilities. <\/p>\n
Commerce Secretary Howard Lutnick has argued the administration is only giving China Nvidia\u2019s \u201cfourth best\u201d chip. This represents an approach to export restrictions, largely supported by the semiconductor industry, that chipmakers should be allowed to sell some chips to China to prevent its national champion Huawei from gaining ground. <\/p>\n
However, the administration\u2019s latest move creates a new set of concerns. <\/p>\n
\u201cIt raises concerns, certainly for many national security minded folks, of \u2014 are we now selling export control licenses? Is there a way that Nvidia will be able to buy licenses to sell more advanced chips than they\u2019re currently able to?\u201d said Owen Tedford, a senior research analyst at Beacon Policy Advisors. <\/p>\n
Stacy Rasgon, a senior analyst at Bernstein Research, underscored that it makes sense for Nvidia and AMD to take a 15 percent cut because \u201c85 percent is better than nothing.\u201d <\/p>\n
However, he added, \u201cIt feels like a little bit of a slippery slope. What\u2019s next? Where does it stop? Does it stop with China AI? Does it move to other China stuff that\u2019s under export control? In that case, sometimes there\u2019s a reason that there\u2019s export controls. Can you buy your way out of them? Strategically, that\u2019s not great.\u201d <\/p>\n
The deals could be a \u201ctemplate\u201d that other companies facing export controls try to follow, Tedford noted. <\/p>\n
\u201cIt\u2019s somewhat unique in the way that they only would have happened with Trump as president,\u201d he said. \u201cIf we’d had a Biden or Harris administration, and even if you\u2019d had the same kind of on-and-off of these H20 chips, this really speaks to Trump\u2019s transactional nature, his desire to get some sort of win.\u201d <\/p>\n
\u201cIt raises questions about how \u2014 and I think this gets to some of more general concerns with the Trump administration \u2014 just, policy feels like it\u2019s for sale in some ways, like policy outcomes,\u201d Tedford added. \u201cIf companies are big enough or strong enough, they can basically buy the policy that they want from the Trump administration.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
Two major chipmakers in the U.S., Nvidia and AMD, have struck an unusual agreement to provide the federal government some of their revenue from chip sales to China \u2014 a<\/p>\n
Continue reading <\/use> <\/svg>'Bizarre' Nvidia, AMD chip export deal with Trump raises legal questions<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":1675,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[11],"tags":[],"_links":{"self":[{"href":"http:\/\/www.logicalware.net\/index.php\/wp-json\/wp\/v2\/posts\/1673"}],"collection":[{"href":"http:\/\/www.logicalware.net\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.logicalware.net\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.logicalware.net\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.logicalware.net\/index.php\/wp-json\/wp\/v2\/comments?post=1673"}],"version-history":[{"count":1,"href":"http:\/\/www.logicalware.net\/index.php\/wp-json\/wp\/v2\/posts\/1673\/revisions"}],"predecessor-version":[{"id":1674,"href":"http:\/\/www.logicalware.net\/index.php\/wp-json\/wp\/v2\/posts\/1673\/revisions\/1674"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/www.logicalware.net\/index.php\/wp-json\/wp\/v2\/media\/1675"}],"wp:attachment":[{"href":"http:\/\/www.logicalware.net\/index.php\/wp-json\/wp\/v2\/media?parent=1673"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.logicalware.net\/index.php\/wp-json\/wp\/v2\/categories?post=1673"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.logicalware.net\/index.php\/wp-json\/wp\/v2\/tags?post=1673"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}