CNBCยท2025-08-11 12:27Core Viewpoint - Nvidia and AMD have agreed to share 15% of their revenues from chip sales to China with the U.S. government in exchange for export licenses, raising questions about the impact on their business and potential for similar arrangements in the future [1][2][4]. Group 1: Agreement Details - The agreement allows Nvidia and AMD to sell their H20 and MI308 chips in China, which were previously restricted under export controls [2][5]. - Nvidia has not shipped H20 chips to China for months but anticipates receiving licenses to resume sales [3][5]. - The arrangement is seen as a way for both companies to secure access to the Chinese market, which is crucial for their revenue [4][6]. Group 2: Market Reaction - Despite the revenue sharing, Nvidia and AMD shares experienced only slight declines in premarket trading, indicating investor confidence in the deal [6]. - Analysts view the arrangement as a net positive, suggesting that 85% of revenue is preferable to losing access to the market entirely [7][11]. Group 3: Long-term Implications - There is uncertainty regarding the long-term implications of the deal, particularly if the U.S. government seeks a larger share of revenues as sales to China increase [8][12]. - The deal is characterized as unusual but reflects the transactional nature of the current administration, with analysts noting it sets a precedent for future agreements [11][12]. Group 4: Geopolitical Context - The semiconductor industry is viewed as strategic by the U.S., with export controls in place to protect national interests [13]. - Concerns have been raised in China regarding the security of Nvidia's chips, with Chinese regulators seeking clarifications on potential vulnerabilities [14][15]. - The arrangement may create mixed feelings in China, as local firms need these chips for AI advancements but may be deterred by the associated costs and security concerns [17][18].