Latest news with #chipmakers
Yahoo
3 hours ago
- Business
- Yahoo
Nvidia and AMD cut a chip revenue-sharing deal with Trump. Here's how their stock prices are reacting
In a historically unusual move, two of the world's largest chipmakers, Nvidia and Advanced Micro Devices (AMD), have reportedly cut a deal with the Trump administration to hand over 15% of their revenues from certain chip sales to the U.S. government. Here's what to know about the deal and how Nvidia's and AMD's stock prices are reacting. No one has office friends anymore. Why that's bad news for employers New research shows why remarkably productive people don't work nearly as hard (or as fast) as you might think The leadership strategy that's more valuable than performance reviews What's happened? Yesterday, the Financial Times reported that chipmaking giants Nvidia and AMD have struck a highly unusual deal with the U.S. government. According to the Financial Times, the deal will see Nvidia and AMD give up 15% of revenues from chip sales of two specific chips to China, the H20 chipset by Nvidia and the MI308 chipset by AMD. In return for the 15% revenue-sharing agreement, the U.S. government has approved export licenses for those chips to China. Without export licenses, which the U.S. had previously failed to grant the companies, Nvidia and AMD could not legally export their chips to the country. The Financial Times cited 'people familiar with the situation, including a U.S. official' as the sources of the information. 'We follow rules the U.S. government sets for our participation in worldwide markets,' a Nvidia spokesperson told Fast Company when reached for comment. 'While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide. America cannot repeat 5G and lose telecommunication leadership.' Fast Company has also reached out to AMD and the Commerce Department. The revenue-sharing agreement is an unusual one, as no other companies before now have ever agreed to share a portion of their revenue with the U.S. government in exchange for export licenses. The Trump administration has reportedly also not decided what the U.S. government will do with the proceeds it reaps from Nvidia and AMD's chip sales to China. A spokesperson for Nvidia did not deny the deal, with the company telling the Financial Times, 'We follow rules the US government sets for our participation in worldwide markets.' What are the H20 and MI308 chips? Before the two chip giants made a revenue-sharing deal with the Trump administration, the H20 and MI308 chipsets had been waiting for months for export license approvals. The H20 chip by Nvidia and the MI308 chip by AMD were designed by the companies for the Chinese marketplace specifically, and within the constraints that the Biden administration had placed on exporting U.S. chips to China. But when Trump came into office earlier this year, his administration placed export controls on those chips over national security fears. Nvidia has previously disputed that its H20 chips could give Chinese industry a leg up in the AI race. Now, however, any supposed national security concerns are taking a back seat to profits, as the export licenses have now been granted after the revenue-sharing deal was agreed. That revenue-sharing agreement stands to see the U.S. government rake in billions as the chipmakers now have the go-ahead to sell to China. According to the Financial Times, one estimate noted that Nvidia could sell as much as $23 billion worth of its H20 chips to China in 2025 alone. How are Nvidia and AMD stock reacting? Obtaining export licenses for chips is usually considered a good thing by investors in any chipmaking company. However, after the Financial Times broke the news of the revenue sharing deal, shares of both Nvidia Corporation (Nasdaq: NVDA) and Advanced Micro Devices (Nasdaq: AMD) are down in premarket trading as of the time of this writing. NVDA shares are currently down about 0.71% and AMD shares are currently down about 1.6%. While these share price drops aren't that large, any decline in a chipmaker's stock price after winning an export license is pretty rare. This could suggest that investors are concerned that companies are ceding too much revenue to the U.S. government in exchange for export licenses, potentially harming their bottom lines. But just as likely is that investors aren't entirely sure how to digest the news. The deal potentially sets a new precedent where companies that need export licenses now may need to start sharing their revenue directly with the U.S. government. Such a system is unheard of in free-market democracies. This post originally appeared at to get the Fast Company newsletter: Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
5 hours ago
- Business
- Bloomberg
Rules of the Game for Chipmakers Selling to China
Horizon Investments CIO Scott Ladner says the market is starting to understand the hoops that chipmakers have to jump through to sell into China, but still face questions on the political front. Ladner speaks with Caroline Hyde and Ed Ludlow on 'Bloomberg Tech.' (Source: Bloomberg)
Bloomberg
a day ago
- Business
- Bloomberg
What a Trump Bid for Cut of Chip Revenue Means for China
A revenue-for-exports deal between the US government and two of the world's biggest chipmakers opens a new front in a trading regime turned upside down by Donald Trump. Bloomberg's Minmin Low and Tom Giles break down what we know so far. (Source: Bloomberg)
Yahoo
a day ago
- Business
- Yahoo
Trump Bid for Cut of Chip Revenue Risks ‘Dangerous World'
(Bloomberg) -- The revenue-for-exports deal between the US government and two of the world's biggest chipmakers opens a new front in a trading regime turned upside down by Donald Trump. Sunseeking Germans Face Swiss Backlash Over Alpine Holiday Congestion New York Warns of $34 Billion Budget Hole, Biggest Since 2009 Crisis Three Deaths Reported as NYC Legionnaires' Outbreak Spreads Chicago Schools' Bond Penalty Widens as $734 Million Gap Looms A New Stage for the Theater That Gave America Shakespeare in the Park Nvidia Corp. and Advanced Micro Devices Inc. agreed to pay the US government 15% of revenue from some chip sales to China. The chips — Nvidia's H20 AI accelerator and AMD's MI308 chips — were earlier banned by the Trump administration and require export licenses to sell. 'To call this unusual or unprecedented would be a staggering understatement,' said Stephen Olson, a former US trade negotiator now with the Singapore-based ISEA — Yusof Ishak Institute. 'What we are seeing is in effect the monetization of US trade policy in which US companies must pay the US government for permission to export. If that's the case, we've entered into a new and dangerous world.' The chip-payment arrangement may face legal challenges because it could be construed as an export tax, something that's not allowed under the constitution, trade experts said. The proposal is the latest direct government intervention into business and finance since Trump returned to the Oval Office in January. As well as a chaotic tariff campaign and persistent criticism of a sitting Federal Reserve chairman, Trump has used his Truth Social platform for everything from calling on CEOs to resign to offering commentary on corporate advertising campaigns. Trump's transactional policy approach saw him approve the sale of United States Steel Corp. to Japan's Nippon Steel Corp. in a $14.1 billion deal that included caveats such as agreeing to US national security rules and a 'golden share' for the US government. Japan, South Korea and the European Union all pledged to invest billions in the US, helping secure tariff rates of 15%, while companies such as Apple Inc. have also skirted levies by promising to invest hundreds of billions of dollars. The Nvidia and AMD revenue-sharing deals may now prompt the White House to target other industries and goods, according to Deborah Elms, head of trade policy at the Hinrich Foundation in Singapore. 'The sky is the limit,' she said. 'You could come up with all sorts of company-specific, country-specific combinations that would say, 'No one else can trade, but if you pay us directly, then you get the ability to trade.'' Although Nvidia and AMD agreed to the terms, there are questions about the legality of the agreement, Elms said. The arrangement looks like an export tax, which is forbidden by the US Constitution. The Trump administration is already in the midst of a lawsuit related to his use of the International Emergency Economic Powers Act to levy what he called 'reciprocal' tariffs on the world. On Friday, Trump warned of a 'GREAT DEPRESSION' if US courts ruled that his tariffs were illegal. Chips are at the heart of the US-China battle to dominate industries of the future such as AI and automation. The Biden administration restricted the sale of advanced chips to China, prompting Nvidia to develop the H20, which skirted such restrictions. Trump administration officials tightened export controls in April by barring Nvidia from selling the chips without a permit. Last month, however, the White House decided to allow Nvidia and AMD to resume sales of chips designed specifically for the Chinese market, which are several rungs below the most advanced artificial intelligence accelerators. Commerce Secretary Howard Lutnick said the administration wanted Chinese developers 'addicted' to American technology. China has grown increasingly hostile to the idea of Chinese firms deploying the H20, particularly after the US called for the chips to be installed with tracking technology to better enforce export controls. Yuyuantantian, a social media account affiliated with state-run China Central Television that regularly signals Beijing's thinking about trade, on Sunday slammed the chip's supposed security vulnerabilities and inefficiency. Still, Chinese companies could use the H20s because domestic firms can't produce enough AI chips to meet demand. That potentially provides an opportunity for Nvidia and AMD to sell more — and now for the US government to earn additional revenue as well. Trump has yet to extend a 90-day trade truce between the US and China, which is set to expire on Aug. 12. Lutnick said last week that the detente was 'likely' to continue as the world's biggest economies continue to engage in talks ahead of a possible meeting between Trump and Chinese President Xi Jinping later this year. 'There's clearly a shift by the administration to take a lighter national security stance as these negotiations are ongoing,' said Drew DeLong, lead in geopolitical dynamics practice at Kearney, a global strategy and management consulting firm. China Draws Red Lines on US Chip Tracking With Nvidia Meeting While the US has intervened before, including by taking stakes in private companies after the 2008 financial crisis, a similar deal like the one struck with Nvidia and AMD is hard to remember and — without proper oversight — could lead to a 'crony capitalism state,' according to Scott Kennedy, senior adviser at the Center for Strategic and International Studies in Washington. 'It represents a huge shift in the way the American economy is supposed to operate,' Kennedy said. 'It won't make anyone happy except maybe the Chinese, who will get their chips and watch the US political system go through gyration and domestic tensions.' (Updates to include reference to constitution in fourth paragraph.) Why It's Actually a Good Time to Buy a House, According to a Zillow Economist The Game Starts at 8. The Robbery Starts at 8:01 Klarna Cashed In on 'Buy Now, Pay Later.' Now It Wants to Be a Bank The Pizza Oven Startup With a Plan to Own Every Piece of the Pie Digital Nomads Are Transforming Medellín's Housing ©2025 Bloomberg L.P.
Gizmodo
a day ago
- Business
- Gizmodo
Pay-to-Play? Trump Slaps 15% 'Export Tax' on Big Tech's China AI Chips
Nvidia and AMD have reportedly agreed to pay the U.S. government a 15% cut of their revenue from their specialized chip sales in China, in a deal so unconventional the business world is still reeling. The arrangement, effectively a new kind of 'export tax,' is an unprecedented move that ends a months-long blockade and reopens one of the world's largest markets for America's two most valuable chipmakers. The news, first reported by the Financial Times, reveals the original and transactional tactics the Trump administration is deploying to generate revenue and control the flow of strategic technology. Nvidia and AMD chips are highly sought after by companies and governments to train their AI tools in the current AI race. For Nvidia and AMD, agreeing to pay the government a portion of their profits was the lesser of two evils. Being completely locked out of the Chinese market was a financial catastrophe. Nvidia had been hit particularly hard. After the administration blocked its China-specific chips in April, the company was forced to take a $4.5 billion charge for excess inventory it could no longer sell. In May, it warned investors that the restrictions would cost the company an estimated $8 billion in revenue for the full fiscal year. Faced with losing billions, handing over 15% of future sales was a price they were willing to pay. The standoff is the latest chapter in the long-running U.S.-China tech war. The U.S. government has been trying to slow Beijing's military advancement by blocking its access to high-end AI chips. After the previous administration banned the sale of their most powerful processors, Nvidia and AMD cleverly designed special, less-powerful 'compliance chips' — like Nvidia's H2O and AMD's MI308 — specifically for the Chinese market. But in April, the Trump administration tightened the screws, requiring a special license to sell even these less powerful chips. That move triggered months of intense, high-stakes lobbying, marked by several White House visits from Nvidia CEO Jensen Huang, which ultimately led to this new arrangement. For the Trump administration, the deal is a win on multiple fronts. It provides a new stream of federal revenue that could help finance the massive tax cuts in the 'One Big Beautiful Bill,' the president's signature legislation. It also allows the administration to look tough on China while simultaneously protecting the financial health of critical American companies. In a carefully worded statement to Gizmodo, an Nvidia spokesperson avoided confirming the 15% figure but acknowledged the new reality. 'We follow rules the U.S. government sets for our participation in worldwide markets,' it reads. 'While we haven't shipped H2O to China for months, we hope export control rules will let America compete in China and worldwide.' The spokesperson added: 'America cannot repeat 5G and lose telecommunications leadership. America's AI tech stack can be the world's standard if we race.' This new deal is a radical departure from traditional trade policy. Governments typically encourage and subsidize exports from their national champions to boost trade balances. This new model, however, forces America's most successful companies to pay for the privilege of competing abroad. It's a pragmatic compromise that gives Nvidia a path to reclaim its dominant market position and potentially push its market value past the unprecedented $5 trillion threshold. But it also sets a startling precedent for how the U.S. government could exert control over its most strategic industries in the future. AMD did not immediately respond to a request for comment.
