- Key Senate Democrats urged President Trump to reconsider the approval of AI chip sales to China.
- Nvidia and AMD stand to make money by selling advanced chips to China, sharing 15% of their revenue with the U.S. government.
- The Democrats emphasized that this agreement poses risks to national security.
On Friday, six Senate Democrats published an open letter addressed to President Donald Trump. They are asking him to rethink his decision to allow tech giants like Nvidia and AMD to export AI semiconductor chips to China while taking a 15% royalty on the earnings.
This letter, signed by Senators Chuck Schumer, D-N.Y.; Mark Warner, D-Va.; Jack Reed, D-R.I.; Jeanne Shaheen, D-N.H.; Christopher Coons, D-Del.; and Elizabeth Warren, D-Mass., was a reaction to Trump’s announcement made on August 11 where he confirmed that Nvidia and AMD would share 15% of their revenue from chip sales to China in exchange for obtaining export licenses.
According to the letter, “For our national security backbone and military efficiency to thrive, America needs innovators to design and deliver cutting-edge tech. Our past triumphs in tech advancements owe much to keeping those technologies out of adversaries’ hands,” the letter highlights.
It continues, voicing concerns: “Compromising the U.S. competitive edge for a mere commission agreement to sell advanced AI technology to a leading global rival is alarming and shouldn’t be taken lightly.”
Furthermore, the Senators warned that presenting advanced AI chips—particularly Nvidia’s H20 and AMD’s MI308 models—to China might bolster the capabilities of its military systems, a claim that’s been rejected by Nvidia.
In response to CNBC’s request, a Nvidia spokesperson remarked: “The H20 won’t boost military power, but it would have drawn global developer interest, aiding America in the AI race. Limiting the H20’s availability to China actually cost taxpayers tremendously without providing any advantage.”
No immediate feedback was received from AMD concerning the letter.
The Democratic Senators asked the administration to provide an in-depth update about the Nvidia and AMD deal by August 22, alongside details about any similar arrangements with other firms.
“We stress again for your administration to halt this reckless trade-off and uphold U.S. tech leadership,” the letter asserts.
In response, Trump’s administration seemed to dismiss the Senators’ national security alerts.
“It’s quite ironic to see Democrats and so-called ‘experts’ feigning concern for our national security after being silent when the Biden administration let advanced H20 chips flow freely to China,” commented White House spokesman Kush Desai to CNBC.
Even with Trump’s green light for chip sales, indications are that China isn’t embracing Nvidia’s return. New reports say Beijing’s urging local tech firms to steer clear of purchasing U.S. chips, as reported by Bloomberg.
“This is becoming a strong directive with reports that [local authorities are realmente stalling] further orders for H20s from some companies,” noted Qingyuan Lin, a senior analyst focused on China’s semiconductor sector at Bernstein.
In a separate report, it was indicated that Chinese regulators have instructed top tech companies, including ByteDance, Alibaba, and Tencent, to pause Nvidia chip acquisitions until a national security evaluation is wrapped up.
— Contribution by CNBC’s Kristina Partsinevelos
