Nvidia and AMD are now required to prioritize American customers over Chinese buyers in a significant shift in U.S. semiconductor trade policy.
New legislation from the U.S. Senate mandates that chipmakers Nvidia Corp. and Advanced Micro Devices Inc. (AMD) prioritize American customers before supplying products to China. This development represents a notable setback for the semiconductor industry, which has been working to block such measures.
In August, Nvidia and AMD entered into a landmark agreement with the U.S. government, committing to share 15% of their revenues from advanced AI chip sales to China. This revenue-sharing arrangement is tied to the companies obtaining export licenses for key products, including Nvidia’s H20 and AMD’s MI308. It marks a significant shift in U.S. trade policy, as the government seeks to exert greater control over the flow of critical AI technology to China, a key geopolitical competitor.
The revenue-sharing deal has sparked legal and constitutional debates, with critics arguing that it may violate U.S. laws prohibiting export taxes. Despite these concerns, the arrangement has progressed, with the Department of Commerce establishing a legal framework to enforce it.
For Nvidia and AMD, this agreement opens the door to China’s lucrative market but comes at the cost of sharing a substantial portion of their revenue. This raises questions about the long-term impacts on their profitability and shareholder value. The precedent set by this move could reshape future technology trade negotiations, highlighting how governments may increasingly use financial mechanisms to influence the global distribution of critical tech resources.
The recent legislation aims to bolster U.S. competitiveness in cutting-edge industries while curbing exports to China and other foreign adversaries. Senator Jim Banks, a Republican from Indiana and lead co-sponsor of the bill, emphasized the importance of this initiative in maintaining U.S. dominance in semiconductor and chip manufacturing.
The accompanying measures that mandate prioritization of U.S. customers over foreign buyers, particularly those in China, complicate the supply chains and market strategies for Nvidia and AMD. These developments underscore a tightening regulatory environment where business decisions are increasingly influenced by national security and political considerations rather than solely by market forces.
This shift in policy reflects a broader trend in U.S. trade relations, as the government seeks to ensure that American technology remains competitive and secure in the face of global challenges.
Source: Original article