Increased Involvement of US Government in Export Activities Possible
The U.S. government's unique revenue-sharing agreement with chip companies Nvidia and AMD for the export of chips to China, under a deal made by former President Trump, could have far-reaching implications for various industries beyond semiconductor manufacturing.
According to U.S. Treasury Secretary Scott Bessent and related analysis, the agreement could affect upstream semiconductor suppliers, AI-dependent industries such as cloud computing, data centers, and AI-driven consumer electronics, Chinese tech sectors, and service industries involved in export and trade compliance.
Upstream Semiconductor Suppliers
The deal requires Nvidia and AMD to share 15% of their China AI chip sales revenue with the U.S. government, which could compress their profit margins. This pressure may extend to suppliers like Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung, as they are critical in the chip fabrication supply chain and may face squeezed margins or shifted demand dynamics due to the revenue sharing.
Artificial Intelligence and Tech Hardware
Since Nvidia’s H20 and AMD’s MI308 chips are specifically used for AI applications, sectors relying on AI hardware capabilities might see changes in supply availability or pricing. This could impact companies relying on AI chips for software deployment or integrated AI solutions.
Chinese Tech and Infrastructure Investment
The agreement might influence Chinese technology firms and infrastructure development, as access to foreign AI chip technology under new licensing terms affects their ability to innovate or maintain competitive edge. This could ripple into software, telecommunications, and electronics manufacturing industries intertwined with AI chip usage and supply chains.
Trade and Export Control Legal/Compliance Services
The unprecedented nature of this revenue-sharing export control agreement introduces complex regulatory compliance and financial arrangements, potentially expanding business for legal, consulting, and finance sectors specializing in international trade, export controls, and government relations.
Initially, Nvidia was unable to deliver its specially trimmed H20 systems to China due to tightened U.S. rules for semiconductor sales. However, after persuasion by Nvidia CEO Huang, the U.S. government rules for semiconductor sales to China were relaxed, allowing Nvidia to export its AI chips to China.
The agreement between the U.S. government and Nvidia and AMD to export chips to China is controversial and has raised questions about the potential for similar deals in other industries. U.S. Treasury Secretary Scott Bessent has not yet discussed the potential expansion of this specific agreement to other industries on U.S. sender Bloomberg TV, but has mentioned the possibility of expansion over time.
The U.S. government's decision to allow the export of AI chips to China after persuasion marks a significant development in U.S.-China trade relations. The agreement between the U.S. government and Nvidia and AMD involves the companies paying a fee for licenses to export to China. The unique agreement could potentially be extended to other industries.
In conclusion, the U.S.-China chip export deal could have significant implications for various industries beyond semiconductor manufacturing. As the deal unfolds, it will be interesting to see how it impacts the aforementioned sectors and further shapes U.S.-China trade relations.
Read also:
- Intensified farm machinery emissions posing challenges to China's net-zero targets
- EU Fuel Ban Alerts Mercedes Boss of Potential Crisis
- Nuclear plant revitalized: Artificial intelligence-led demand breathes life into the Great Lakes nuclear facility
- International finance institutions, EBRD, EIB, and SEB, offer €84.8 million in loans for solar energy projects within Latvia.
