Chipping In: Nvidia and AMD's Revenue Deal with U.S. Sparks Controversy

In a significant and unprecedented move, Nvidia and Advanced Micro Devices (AMD) are set to allocate 15% of their revenue from advanced chip sales to China to the U.S. government. This decision comes amidst an ongoing tug-of-war over technology access between Washington and Beijing, where national security concerns are paramount.

Trump's administration previously blocked sales of Nvidia's H20 chips, only to grant licenses recently, indicating a softening stance for the sake of U.S.-China trade negotiations over rare earth materials. However, industry experts challenge the logic behind resuming sales under revenue-sharing terms, citing concerns over loopholes in national security.

With China being a lucrative market, the agreement might seem like a strategic compromise. Still, the move could slice into Nvidia and AMD's profitability, potentially setting a wider precedent for similar future arrangements. The trade deal stirs debate on whether financial incentives should influence export control decisions.

(With inputs from agencies.)