U.S. Government To Take Cut of Chip Sales to China
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Business unusual, two of the world's top chip makers plan to pay the Trump administration a portion of their China sales. Plus, an Israeli airstrike kills five journalists from the Al Jazeera network. And we'll tell you why division between red and blue states is becoming deeper than ever.
And it's leading to a sense that America is not a unified country, but really two nations.
one red and one blue, sharing the same national borders. It's Monday, August 11th. I'm Azhar Sugri for The Wall Street Journal. Here is the AM edition of What's News, the top headlines and business stories moving your world today. In a pretty unorthodox move for any company, NVIDIA and Advanced Micro Devices say they will give the Trump administration a portion of the sales from their artificial intelligence chips to China. People familiar with the matter say the administration will receive 15% of the sales as part of a deal to approve exports for NVIDIA's H20 AI chips to China. Details of the arrangement are still being worked out, but as Asia business editor Peter Landers explains, making companies pay to export products is very unusual.
It's just, from what I can remember, an unprecedented case of the government taking a portion of a commercial private sector company's revenue in exchange for allowing it to go ahead, I suppose. It's one thing If the government had, for example, contributed some of the technology in the product, the government might ask for some royalties. But just for allowing the sales to go forward, the government asking 15%, that's not what the government usually does in a case like this. It either decides that these sales should be permitted from the perspective of national security and the national interest, and they take place, or it decides that it's not in the national interest. And they don't happen at all.
But this sort of 15 percent, 85 percent solution is a new one so far as I can remember.
And Peter says the arrangements with NVIDIA and AMD represent part of Trump's departure from traditional U.S. trade policy to a so-called quid pro quo instead.
We've already seen a version of this in the tariffs that he's imposed. on trading partners, including longtime U.S. friends like the European Union, Japan, South Korea.
What is the unusual deal between the U.S. government, Nvidia and AMD over AI chip sales to China?
And the way the president sees it, they should pay a fee, as it were, a tariff in exchange for being permitted to access the large and lucrative U.S. market. And then this is sort of the same thing in reverse. NVIDIA is saying they would like to sell some of these advanced chips in China. And Trump seems to have the idea that, OK, we can do that, but we need to receive a cut or something in return. And that return would be 15% of the sales.
Turning to another big chipmaker now, and we are exclusively reporting that Intel CEO Lip Bu Tan is expected to meet with President Trump today. The visit follows Trump's call for his removal last week over ties to Chinese businesses. People familiar with the matter say Tan is expected to have a wide-ranging conversation with Trump with the aim of explaining his personal and professional background. One of the people said Tan hopes to win Trump's approval by showing his commitment to the country and pledging the importance of keeping Intel's manufacturing capabilities as a national security issue. Meanwhile, we've learned that Liu Jianchao, a senior Chinese diplomat widely seen as a potential foreign minister, has been taken away by authorities for questioning.
According to journal reporting, Liu was detained after returning to Beijing from a work trip overseas in late July.
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Chapters
3 chapters
1
What is the main topic discussed in this episode?
0:00–2:57
2
What is the unusual deal between the U.S. government, Nvidia and AMD over AI chip sales to China?
2:57–9:14
3
How much of Nvidia and AMD's China AI‑chip sales will the Trump administration reportedly take and why is that unprecedented?
9:14–15:03
Speakers
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