Nvidia and AMD Adjust to New China Fee with Wedbush's Guidance

Nvidia and AMD are adjusting to new rules in the game due to a 15% China fee, according to Wedbush. The fee impacts Nvidia's computing and networking solutions, graphics processors, and other products. Net sales for Nvidia break down by family of products and industry, with the majority coming from data storage, gaming, and professional visualization. The company's net sales are geographically distributed across the US, Taiwan, China, and other regions.

Nvidia and AMD are adapting to new export regulations that require them to share 15% of their semiconductor sales revenues with the US government. This unprecedented arrangement, aimed at maintaining America's AI business dominance while preserving trade ties with China, has significant implications for both companies and the broader semiconductor market.

The deal, brokered by President Donald Trump, allows Nvidia to export its H20 chips and AMD's MI308 chips to China, provided they pay the US government a 15% fee on these sales. The export licenses were granted following a meeting between Nvidia CEO Jensen Huang and Trump on Wednesday, with no shipments yet made. The arrangement came after the Trump administration expressed openness to lifting its export ban on these technologies, but only if Nvidia and AMD agreed to the fee structure [1].

The H20 chips, while sophisticated, are not Nvidia's most advanced processors. The Blackwell chip, a significantly more advanced processor, remains off-limits to China, despite the US administration's willingness to consider exporting it for a higher fee. Trump has indicated that he might be open to selling an "unenhanced" version of the Blackwell chip in the future, but only if Nvidia pays a higher percentage of its revenues [1].

China's acceptance of these chips remains uncertain. The country has expressed security concerns about the H20 chips, claiming they could have "backdoors" that impact their function and security. These concerns mirror those raised by the US in the past regarding Chinese technology, most notably Huawei's growing influence in global communications infrastructure [1].

The 15% fee impacts Nvidia's computing and networking solutions, graphics processors, and other products. Net sales for Nvidia break down by family of products and industry, with the majority coming from data storage, gaming, and professional visualization. The company's net sales are geographically distributed across the US, Taiwan, China, and other regions [2].

The geopolitical chessboard of US-China trade relations is complex and volatile. China is accelerating its semiconductor self-sufficiency, aiming to achieve a 55% AI chip market share by 2027 through initiatives like Huawei and SMIC. This push for self-sufficiency could further reshape global AI dynamics and impact Nvidia's stock valuation, which has shown resilience despite the geopolitical risks [2].

Investors are weighing the stability of US policy, domestic competition, and margin pressures as China's tech ambitions reshape the global AI landscape. Nvidia's ability to navigate these complex trade dynamics will be crucial in determining its future growth and profitability.

References:
[1] https://www.cnn.com/2025/08/11/china/us-china-trade-nvidia-chips-intl-hnk
[2] https://www.ainvest.com/news/nvidia-strategic-exposure-china-policy-risk-geopolitical-licensing-decisions-impact-ai-chip-demand-stock-valuation-2508/