The Trump administration had reportedly negotiated a 15% share of the revenues both companies receive from selling their China-compliant AI chips.
Shares of artificial intelligence (AI) chipmakers Nvidia (NVDA) and AMD (AMD) fell in Monday’s early premarket session, weighed down by a report that suggested a dent to their China revenue.
A Financial Times report stated that the Trump administration had negotiated a 15% share of the revenues that both companies receive from selling their China-compliant AI chips, as a quid pro quo measure for granting licenses to export these chips to the Asian nation.
In Monday’s premarket session, Nvidia stock fell over 1% and AMD stock moved down more than 2%.
Nvidia began selling H20 AI chips in China after the Biden administration imposed restrictions on exporting high-performance chips to the country last year, citing security concerns. However, exports of these chips were banned in April, although CEO Jensen Huang signaled in mid-July that the White House had agreed to allow the resumption of sales soon.
AMD’s similar offering is dubbed MI308.
Jacob Feldgoise, a researcher at the DC-based Center for Security and Emerging Technology, said, “This seeming quid pro quo is unprecedented from an export control perspective. The arrangement risks invalidating the national security rationale for U.S. export controls,” according to Bloomberg.
“Allies may not believe U.S. policymakers if they are willing to trade away those same national security concerns for economic concessions — either from U.S. companies or foreign governments.”
According to Bernstein’s estimates, Nvidia would have generated $23 billion in sales of H20 chips if the Trump administration hadn’t gone on to tighten its predecessor’s curbs further in April.
On Stocktwits, retail traders maintained their ‘bullish’ bias on Nvidia by early Monday and the ‘extremely bullish’ stance on the AMD stock. While the message volume on Nvidia was ‘low,’ AMD attracted brisk retail chatter.
Shares of Nvidia and AMD have gained 36% and 43%, respectively, year-to-date.
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