An agreement that looks a bit… strange, but could turn out to be golden.
The two semiconductor giants, Nvidia and AMD , have struck a deal with the U.S. government. They will give 15% of their revenues from sales in China directly to the American state.
That’s like putting a huge tax on them, isn’t it? Well… yes, but not only that. Because in return, they get back the license to sell their top-tier chips in the massive Chinese market.
And we’re talking about China here, right? The second-largest economy in the world, with an AI industry running at Formula 1 speeds.
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THE DEAL
The deal is simple in theory, but huge in significance.
Nvidia and AMD had restrictions on exporting advanced chips to China, due to U.S. regulations. To “play” in that market, they needed an export license.
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Trump, known for his “I don’t give you anything unless I get something back” approach, essentially said: “You want a license? Fine. You’ll give me 15% of your revenues from China.” And both companies said… deal.
Specifically:
(a) Nvidia ($NVDA) will once again sell the H20 chip, designed specifically to pass U.S. export controls.
(b) AMD ($AMD) will export the MI308 chip.
And we’re talking about billions in sales here.
After the announcement, shares of both companies went up. Why? Because, from an investment perspective, 85% of the revenue is better than 0%.
In other words, they might lose 15%, but without the deal… they’d have nothing.
Some see this agreement as an “indirect tariff” or a “withholding tax.” Others say it’s just a classic Trump move. Beyond the financial side, though, there’s the strategic importance.
Semiconductors are the heart of artificial intelligence, modern industry, and even defense. Washington sees them as a strategic advantage, and that’s why the rules for chips are far stricter than for any other product.
CHINA’S POSITION
But China hasn’t stayed silent. In recent weeks, they have accused Nvidia of possible “backdoors” in its chips—something the company has categorically denied, twice in fact.
On one hand, they desperately want these chips to advance their AI ambitions. On the other, the deal with the U.S. makes them more expensive and leaves lingering doubts about security.
It’s a real dilemma—they need them to move forward, but the political dimension complicates everything.
For now, the deal gives both companies stability. They know they can sell to China without fearing a new ban tomorrow morning.
Of course, if sales to China grow significantly, there’s no guarantee Washington won’t decide that 15% should become… 20% or 25%—but that’s another story.
INVESTMENT VIEW
We’re talking about two companies re-entering a market worth hundreds of billions.
Even with 15% going to the U.S. government, the profits they can generate are massive. That’s why investors see the deal as a positive.
Personally? I see it as a win-win.
The U.S. gets its share, Nvidia and AMD reopen the door to China, and investors who believe in these companies have a major opportunity ahead.
Posted Using INLEO