A recent agreement involving major chip manufacturers Nvidia and AMD has ignited a heated debate among financial commentators. These companies have reportedly consented to remit 15% of their revenues derived from chip sales in China to the U.S. government. This contentious arrangement, a prerequisite for obtaining crucial export licenses for advanced AI chips, has been vehemently denounced as an 'unconstitutional' maneuver and a radical shift in international trade dynamics.
Economist Peter Schiff and the financial analysis platform The Kobeissi Letter have publicly voiced strong objections to this deal. Schiff characterized the revenue-sharing agreement as a 'federal shakedown,' emphasizing the unusual demand for a percentage of revenue rather than profit. He took to social media to highlight the unconstitutionality of such a payment structure.
The Kobeissi Letter further elaborated on the broader implications of this development, suggesting that it marks a new phase in trade relations, particularly under the Trump administration. This novel approach involves 'company-by-company' trade negotiations, a departure from traditional multilateral trade agreements. The commentators underscored the magnitude of this shift, pointing out that it affects top chipmakers and covers a significant portion of their sales in a critical market like China, potentially ushering in an unprecedented era in the ongoing trade disputes.
This controversial agreement emerges despite the Trump administration's recent easing of export restrictions on certain Nvidia H20 chips destined for China, restrictions initially imposed due to national security concerns. Nvidia, for its part, has defended its compliance with the U.S. government's regulations, stating that it adheres to established rules for operating in global markets. The unfolding situation highlights the complex interplay between technological advancement, national security, and international commerce, as governments increasingly leverage economic influence to achieve strategic objectives.
This unprecedented revenue-sharing mandate for chip exports to China signifies a profound transformation in global trade policy, eliciting concerns about its fairness and long-term consequences for international business and diplomatic relations.