Trump Allows Nvidia and AMD to Export AI Processors to China, Potentially Disrupting Global Chip Supply Chain

President Donald Trump has allowed Nvidia and AMD to export AI processors to China, despite previous warnings from the US to limit engagement with China. The decision has sparked debates about the implications for China's access to advanced US technology and could lead to changes in the global semiconductor supply chain. The US had previously urged international firms to limit their engagement with China, but the new deal could weaken these export controls further.

In a significant shift in U.S. trade policy, former President Donald Trump has approved a deal allowing Nvidia and AMD to export AI processors to China, despite previous warnings to limit engagement with China. This decision has sparked debates about the implications for China's access to advanced U.S. technology and could lead to changes in the global semiconductor supply chain.

The semiconductor supply chain is global, involving a wide array of non-U.S. companies, often based in countries that are U.S. allies. Nvidia’s chips may be designed and sold by a U.S. company, but they’re manufactured by Taiwan’s TSMC, using chipmaking tools from companies like ASML, which is based in the Netherlands, and Japan’s Tokyo Election, and using components from suppliers like South Korea’s SK Hynix [1]. The U.S. had previously urged these global companies to limit their engagement with China, but the new deal could weaken these export controls further.

The deal, brokered by Trump, allows Nvidia and AMD to resume sales of their less powerful AI processors—Nvidia's H20 AI accelerator and AMD's MI308 chips—to China. This marks a significant departure from traditional export control policies and a reversal of earlier restrictions imposed by the Trump administration in April 2025. The deal aims to balance national security concerns with the economic interests of American technology firms, while also addressing the lucrative Chinese market [2].

The revenue-sharing model has sparked investor apprehension, leading to slight declines in the stock prices of both companies despite the re-issuance of export licenses. Nvidia's shares dropped 1.16%, and AMD's slipped 2.3% in premarket trading on Monday, August 12, 2025, underscoring investor concern over the precedent set by the revenue-sharing model and its potential long-term impact on profitability [2].

The deal signals a potential new phase in the U.S.-China trade war, where economic concessions are directly tied to market access for sensitive technologies. This "quid pro quo" arrangement is a significant departure from previous export control policies and adds another layer of complexity and unpredictability to global technology supply chains [2].

References:
[1] https://fortune.com/2025/08/16/us-china-chip-deal-nvidia-amd-global-chip-supply-chain/
[2] https://www.ainvest.com/news/nvidia-amd-china-ai-chip-deal-signals-bullish-trends-ai-related-tech-stocks-wedbush-2508/