The 15% toll on China’s AI future

Welcome to AI Collision 💥,

In today’s collision between AI and our world:

• China… at a cost
• The start of something… expensive?
• China says “watch out!”

If that’s enough to get the reverse tariffs pumping, read on…

AI Collision 💥

Washington just turned export controls into a business model. Beijing just turned procurement into information warfare.

This week, the Trump administration pulled off something we’ve never seen before, a first-of-its-kind export revenue share with two of the world’s most powerful AI chipmakers.

Nvidia and AMD can keep selling their “China-legal” accelerators into the mainland but only if they hand over 15% of that revenue to the US government.

It’s not a tariff on imports. It’s a tollgate on exports. You want access to China’s AI market? Pay Trump at the gate.

The arrangement covers Nvidia’s H20 and AMD’s MI308. These are both deliberately engineered to slip under Washington’s performance limits. Washington knows this, and they’re cool with it… for a price.

In exchange for the revenue skim, both companies get the paperwork to keep those shipments flowing… and the hope that future “safe” chips might also get the green light.

This comes barely a week after the White House floated 100% tariffs on imported semiconductors. Put the two together and you see the shape of the strategy.

• Tariffs push manufacturing back onshore.
• Revenue sharing monetises the US IP that still gets sold abroad.

It’s the old carrot and meter. And the suggestion is its just the beginning.

If it works here, as in Nvidia and AMD cough it up, and the access to China’s market far outweighs the cost of the 15% (which it likely will) don’t be surprised if the same logic gets applied to advanced biotech, green tech, or anything else the US considers “strategic” yet still wants to sell to China.

Beijing of course isn’t a silent partner in all this. Within days of the deal being confirmed, China’s cyberspace regulator summoned Nvidia over alleged “backdoor safety risks” in the H20.

State-linked outlets amplified the claim that the chips could be tracked or even disabled remotely. And pressure began to mount on Chinese companies to avoid using the Nvidia H20 chips altogether.

Some reports are there’s an outright ban on them. Albeit no one seems to be able to full substantiate that claim.

Nvidia denies any backdoors exist. They just want to sell throttled chips to China, it’s a tough life isn’t it…

For Nvidia, China is still one of the only non-US markets that can absorb tens of thousands of their chips at regular speed. Losing it entirely would be brutal. It’s really a non-negotiable. Which means a 15% haircut is painful, but survivable, acceptable.

For AMD, the math is similar, if not more critical.

The strategic prize is keeping Chinese channels alive long enough to push MI300-class platforms into a Nvidia CUDA-dominated world. AMD wants to keep chipping away (unintentional pun) at China just to win some market share off Nvidia.

Both get short-term access. Both now carry open-ended policy risk. If Beijing’s “backdoor” narrative hardens, or is proven to be true, orders can evaporate overnight. Then what if Washington decides 15% should be 25%, margins shrink on a government memo.

Would Trump squeeze them further? It’s not off the table surely, but then again he must realise their importance as the growth engine of the US stock market?

This is the part investors should really watch. A negotiated export levy that swaps market access for a revenue cut is a template that can and likely will be copied.

And it might not just apply to America.

Europe could slap it on luxury goods headed to China. China could slap it on rare earths going into the US. The beauty, from a policymaker’s point of view, is you don’t have to fully close the door. You just get paid for keeping it half open.

Expect multinationals to start modelling “policy take rates” alongside cost of capital.

What the H20 episode really shows is how even the so-called “safe” industry is still a political minefield.

Washington wants to drip-feed just enough compute to keep US firms entrenched in domestic progress while starving China of the frontier horsepower that would erase those advantages. But not killing off a huge part of American capitalism… the world’s biggest market.

Beijing wants to accelerate homegrown chips, cut dependency, and plant a seed of doubt in every foreign order. If they had their way, Huawei would be better than Nvidia, be able to make their domestic needs and not rely on the US at all.

Such is the dominance of Nvidia and AMD, that’s still not possible… at least not for now at least, or likely not for some time still.

The world’s most important supply chain now runs through a tollbooth and a rumour mill. And tensions between China and the US rests solely on AI progress.

AI remains the lever that will decide if trade de-escalation is even possible. There’s no lasting economic truce without a compute truce.

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3 Stocks to Buy Ahead of NVIDIA’s CEO’s August Announcement

This August, Nvidia CEO Jensen Huang is expected to announce what could be the greatest AI breakthrough in history…

That AI has broken into the physical realm.

In a surprise announcement, Huang could be about to announce that Nvidia’s reveneue has already doubled as a result of it. And it could be about to drive the next round of mad money AI gains.

Boomers & Busters 💰

AI and AI-related stocks moving and shaking up the markets this week. (All performance data below over the rolling week).

Boom 📈

• Micron (NASDAQ:MU) up 14%
• AMD (NASDAQ:AMD) up 13%
• Qualcomm (NASDAQ:QCOM) up 7%

Bust 📉

• IBM (NYSE:IBM) down 4%
• Tower Semiconductor (NASDAQ:TSEM) down 4%
• AeroVironment (NASDAQ:AVAV) down 3%

From the hive mind 🧠

• I don’t expect this would ever happen. But you never know these days. The idea of An out-and-out AI company buying and owning Google’s Chrome is wild, but it’s a big dollar amount on the table.
• Rolls Royce, the kings of AI. Has a nice ring to it don’t you think? Maybe it will be AI that sends Rolls Royce to the top of the UK’s most valuable companies list?
• Ditching xAI to go create an AI safety firm probably says something about the way in which xAI is progressing don’t you think?

Artificial Polltelligence 🗳️

Weirdest AI image of the day

ChatGPT’s random quote of the day

Thanks for reading, and don’t forget to leave comments and questions below,

Sam Volkering

Editor-in-Chief

AI Collision