Nvidia, AMD AI Deal, Intel CEO to Meet Trump | Bloomberg Tech 8/11/2025

Key Concepts:

• Semiconductor industry, AI chips, export licenses, China, U.S. government, tariffs/export tax, national security, revenue generation, NVIDIA, AMD, Intel, Lip-Bu Tan, Chips Act, Blackwell chip, H20 chip, U.S.-China relations, trade negotiations, rare earth metals, Micron, Huawei, Micron, supply chain, electric vehicles, Ukraine-Russia conflict.

1. NVIDIA and AMD's Agreement with the U.S. Government

• The Deal: NVIDIA and AMD have reportedly agreed to give the United States 15% of any revenues from AI chip sales to China in exchange for export licenses. This is described as a "quid pro quo tariff."
• Unprecedented Nature: This arrangement is considered unprecedented, with the U.S. government essentially becoming a stakeholder in the semiconductor industry.
• Joe Mathieu's Perspective: The U.S. government is now invested in the semiconductor business. The question is where the line is.
• AMD's Silence: AMD has not confirmed the revenue split, while NVIDIA has been more forthcoming.
• Fiscal Year Impact: NVIDIA hasn't shipped A20s to China this fiscal year.
• President's Involvement: The President seems willing to oblige NVIDIA and AMD because he is getting something in return.
• Constitutional Concerns: Article One, Section Nine of the Constitution states that no tax or duty should be levied on articles coming from any state.
• Revenue Generation vs. National Security: The administration is driving towards revenue generation in export controls, including high-end semiconductors. What is the line on what is considered too advanced as it balances against this revenue generation goal?

2. China's Perspective and Potential Responses

• Concerns about Information and Backdoors: China is concerned about the amount of information and potential backdoors in the chips, particularly with NVIDIA's Jensen Huang.
• Leverage with Rare Earth Metals: China has significant leverage due to its control over rare earth metal licenses.
• Potential Restrictions on Critical Inputs: China could restrict licenses for critical inputs, paralyzing production lines and hindering manufacturing ambitions.
• Push for Easing Restrictions: China wants an easing of high-bandwidth memory chip restrictions.
• HUAWEI's Capabilities: If HUAWEI is able to produce comparable chips, will U.S. chip controls be used to allow U.S. technology to compete head-to-head?

3. Intel and Lip-Bu Tan's Situation

• Intel CEO's White House Visit: Intel CEO Lip-Bu Tan is set to visit the White House days after Trump called for his resignation due to potential conflicts of interest.
• Administration's Goals: The Trump administration wants an affirmation that all semiconductor plant building in the U.S. is going to go ahead.
• Wall Street's Perspective: Wall Street doesn't want Intel to build these plants until they can fill them.
• Chips Act Money: Investors are worried about lack of access to Chips Act money.
• Investor Concerns: Investors don't care where the chips are made. Building them is a way for the company to go out of business.
• Joanna Sweeney's Analysis: It's unclear if Lip-Bu Tan needs to do more to separate from his prior work and investments.
• Uncertainty Around Intel: There are too many uncertainties around Intel's potential to make a comeback.

4. Technical Aspects and Market Impact

• H20 Chips: H20's are used for inference compute.
• Performance Engineering: H20 has had performance engineered out of it.
• Revenue at Risk: The potential revenue at risk is $30 billion for Intel and $6 billion to $10 billion for AMD.
• Margin Impact: Paying 15% will cut into margins, but the stocks are up because this resolves uncertainty.
• Modeling China Revenues: Analysts can model the 15% hit to revenue.
• Legal Challenges: It's unconstitutional to impose export taxes like this, but it's not clear who would have the legal standing to object to the tax.

5. President Trump's Statements and Geopolitical Context

• Trump's Confirmation: Trump confirmed that NVIDIA will pay 15% of revenues to the U.S. government.
• H20 Chip is Obsolete: Trump said the H20 is obsolete and HUAWEI has a similar chip.
• Blackwell Chip: Trump said he would make a deal for a somewhat enhanced in a negative way Blackwell.
• Meeting with Putin: Trump is planning to meet with Vladimir Putin and Zelenskyy.
• Ukraine-Russia Conflict: Trump discussed the Ukraine-Russia conflict and potential land swapping.
• China's Trade Practices: China beat the U.S. with trade.

6. Ford's EV Strategy

• Investment in Budget EVs: Ford plans to invest $5 billion building a new line of budget EVs ($30,000).
• Shift in Strategy: This represents a massive shift for Ford.

7. Key Quotes

• "Unorthodox is the understatement." - Regarding the 15% revenue sharing agreement.
• "We are in uncharted territory here." - Regarding the 15% revenue sharing agreement.
• "The U.S. government is now a part of the semiconductor industry and are invested in the business." - Joe Mathieu
• "It feels like a slippery slope." - Stacy, regarding the 15% revenue sharing agreement.

Synthesis/Conclusion:

The semiconductor industry is facing significant geopolitical pressures, particularly concerning trade with China. The U.S. government's involvement, exemplified by the 15% revenue sharing agreement with NVIDIA and AMD, is unprecedented and raises questions about the balance between national security, revenue generation, and constitutional principles. China's potential responses and the future of U.S.-China relations remain uncertain. Intel, under the leadership of Lip-Bu Tan, faces its own challenges in navigating these complex dynamics while satisfying both the U.S. government and investors. President Trump's statements add another layer of complexity, highlighting the transactional nature of the administration's approach to trade and foreign policy.