Trump Deal Sparks Global Semiconductor Supply Chain Shifts Amid Easing U.S. Export Controls

Trump’s recent deal allowing Nvidia and AMD to export AI chips to China in exchange for a share of their sales is triggering ripples across the already intricate global semiconductor supply chain, with implications extending far beyond U.S. borders [1]. The deal, which has been described by some as a shift in U.S. export control policy, raises questions about whether other companies could seek similar arrangements, potentially undermining years of coordinated international efforts to restrict advanced semiconductor technology from reaching China [1].

Nvidia and AMD’s chips, though designed in the U.S., rely heavily on a global supply chain. These chips are manufactured by TSMC in the U.S.-allied region of China Taiwan, using lithography machines from ASML in the Netherlands and components from Japanese and South Korean suppliers [1]. For years, the U.S. has pressured these non-U.S. firms and transshipment hubs like Singapore and the United Arab Emirates to monitor shipments and prevent restricted chips from reaching China [1].

The Trump administration’s decision has cast doubt on the core rationale of export controls—national security. “This tells you that national security is not really the issue,” says Mario Morales of IDC. “Companies and countries will probably have to revisit what their strategy has been, and in some cases, they’re going to break away from U.S. administration policies.” Morales adds that if Nvidia and AMD can receive special treatment, other companies may push for similar deals [1].

The Biden administration had invested significant diplomatic effort into aligning allies behind export controls. This included pressuring TSMC and Intel to limit advanced chip production expansion in China and encouraging allies to impose their own sanctions [1]. However, U.S. efforts faced resistance, particularly from Japan and the Netherlands, which were reluctant to fully align with U.S. controls due to economic concerns [1]. Analyst Jennifer Lind notes that countries are often “deeply unenthusiastic” about restricting their firms from accessing lucrative markets like China [1].

The Trump deal could further weaken export controls through ongoing trade negotiations. Chinese officials might push for a broader trade agreement in exchange for relaxing restrictions on U.S. chip sales, much like the current arrangement with Nvidia and AMD [1]. Japan and South Korea may also use chip controls as leverage in their own trade discussions with the U.S. [1].

Another concern is the continued smuggling of advanced GPUs to China via third-party jurisdictions such as Thailand and Malaysia. Paul Triolo, a partner at the DGA-Albright Stonebridge Group, notes that the U.S. lacks the resources to monitor such flows effectively [1]. Additionally, Chinese companies could gain access to advanced AI computing power through overseas data centers, a loophole that the Trump administration has not shown signs of addressing [1].

Despite these concerns, not all analysts expect a total collapse of the export control regime. Chris Miller, author of Chip War, argues that the coalition supporting these controls is too complex and uncertain to be easily unraveled [1]. TSMC and ASML, for example, hold unique positions in the global supply chain that give the U.S. leverage in negotiations [1]. Ray Wang of the Futurum Group adds that the Trump administration is unlikely to give away such leverage lightly [1].

Still, the Trump deal has created a new dynamic. It signals that political influence and financial arrangements can override traditional export control logic, potentially encouraging other companies and countries to seek similar exceptions [1]. The semiconductor industry’s future will depend on how the U.S. and its allies respond to these developments, and whether the control system can withstand the pressures of economic incentives and geopolitical strategy.

Source: [1] title1 (https://fortune.com/2025/08/16/us-china-chip-deal-nvidia-amd-global-chip-supply-chain/)