Trump's Unprecedented Economic Statecraft: US Government Takes Equity Stake in Intel

President Trump is inserting the government in corporate affairs to achieve his goals, including acquiring a 15% revenue share from Nvidia and AMD's Chinese AI chip sales, and discussing a stake in Intel. This unprecedented approach, which has surprised Wall Street and Washington policy veterans, aims to catapult the US ahead of China in national security areas. However, experts warn of potential market distortions and compare the approach to the Chinese model.

President Trump's administration has implemented a novel approach to U.S.-China semiconductor relations, securing a 15% revenue-sharing deal with Nvidia and AMD for their Chinese AI chip sales. This unprecedented move, which has raised eyebrows on Wall Street and in Washington, aims to bolster U.S. national security by acquiring a significant financial stake in the sales of these advanced chips. The deal, brokered by the U.S. government, requires Nvidia and AMD to remit 15% of their revenues from sales of certain AI chips to China in exchange for export licenses to sell Nvidia's H20 and AMD's MI308 chips in the Chinese market [1].

The implications of this deal are far-reaching. While it allows Nvidia and AMD to re-enter the lucrative Chinese market, the direct cut to their top line has sparked investor apprehension. Shares of both companies closed moderately lower on Monday following the announcement, underscoring the concern over the precedent set by the revenue-sharing model and its potential long-term impact on future profitability [1].

Analysts have expressed mixed opinions on the deal's implications. Ben Barringer, global technology analyst at Quilter Cheviot, noted that "from an investor perspective, it's still a net positive, 85% of the revenue is better than zero" [1]. However, George Chen, partner and co-chair of the digital practice at The Asia Group, cautioned that "the question will be whether Nvidia and AMD adjust their prices by 15% to account for the levy" [1].

The deal has also raised concerns about the precedent it sets for other companies and industries. Neil Shah, partner at Counterpoint Research, described the revenue cut as an "indirect tariff at source" and suggested that such deals are unlikely to extend to other sectors like software and services [1]. This uncertainty highlights the potential for a "slippery slope," where China may lean harder on domestic players like Huawei if similar deals are struck with other U.S. companies [1].

Geopolitical implications are also significant. China has raised concerns about the security of Nvidia's chips and the potential for "backdoors" that could be exploited for national security purposes [1]. The U.S. government's move to secure a revenue share from these sales has stirred mixed feelings in China, with the Chinese government yet to comment on the reported revenue agreement [1].

In conclusion, Nvidia and AMD's 15% revenue-sharing deal with the U.S. government represents a significant shift in the semiconductor landscape and geopolitical relations. While the deal allows these companies to re-enter the Chinese market, the long-term implications for their profitability and the broader semiconductor industry remain uncertain. The precedent set by this deal could have far-reaching consequences for other U.S. companies and industries, as well as the geopolitical dynamics between the U.S. and China.

References:
[1] https://www.cnbc.com/2025/08/11/trump-nvidia-amd-china-chip-revenue-deal-implications.html
[2] https://cepa.org/article/chip-challenge-goodbye-export-controls/