A hedge fund manager sparked debate this week with a sharp question about the Trump administration’s latest chip export deal: “So we’re extorting our own businesses in exchange for letting them arm our greatest enemy?”
Spencer Hakimian, founder of the investment firm Tolou Capital, posted the comment on X after reports confirmed a controversial revenue-sharing agreement between the U.S. government and major chipmakers.
The deal involves Nvidia and Advanced Micro Devices, two of America’s top semiconductor companies.
Both firms have agreed to give the U.S. government 15% of their revenue from AI chip sales to China in exchange for export licenses.
This applies specifically to certain high-end chips, including Nvidia’s H20 and AMD’s MI308.
Economist Peter Schiff called the deal a “Federal shakedown,” saying it “is unconstitutional, as are export taxes.” Schiff, known for his libertarian stance on economic issues, argued the policy violates the Constitution’s ban on export taxes.
Scaled-Down Chips, Same Risk?
President Donald Trump defended the policy, saying that the chips allowed for export are deliberately weakened versions of Nvidia’s most advanced products.
Referring to the Blackwell chip, Trump told reporters, “A somewhat enhanced-in-a-negative-way Blackwell. In other words, take 30% to 50% off of it.”
Despite this, critics say even reduced-capability chips could give China a significant boost.
“Even with scaled-down versions of flagship Nvidia (chips), China could spend and buy enough of them to build world-leading, frontier-scale AI supercomputers,” said Saif Khan, a former official with the White House National Security Council.
Khan and other analysts worry that such exports could help China advance its military and surveillance capabilities.
That concern formed the basis of prior Biden-era restrictions, which aimed to keep China generations behind the U.S. in AI development.
From Ban to Bargain
In April, the Trump administration blocked Nvidia from selling chips to China.
But the position softened in July, and now licenses are being issued again, if companies agree to hand over 15% of their China revenue.
According to Trump, he initially pushed for a 20% cut. “The H20 is obsolete,” he said. “So I said, ‘Listen, I want 20% if I’m going to approve this for you, for the country.'”
Both Nvidia and AMD have publicly confirmed the exact terms of the deal. However, an Nvidia spokesperson said, “We follow rules the U.S. government sets for our participation in worldwide markets.”
An AMD spokesperson said the company’s exports to China comply with all U.S. laws but did not directly address the revenue-sharing arrangement.
Unusual Policy, Unusual Backlash
Legal scholars and economists have flagged the deal as a major departure from standard U.S. trade policy.
Normally, the U.S. doesn’t ask for revenue cuts in exchange for export permission. Critics say this move sets a troubling precedent.
Trump’s allies argue it’s a strategic tradeoff, allowing exports while recapturing some of the financial benefit.
But Hakimian’s post tapped into broader public unease: Are American companies being forced to choose between losing the Chinese market or paying a toll to Washington?
The Commerce Department has said that the export of these chips doesn’t compromise national security.
Yet others disagree. With AI quickly becoming central to global military power, even slightly degraded chips could result in long-term consequences.
As Nvidia and AMD prepare to ramp up shipments to China, this new model, export approval in exchange for a revenue cut, is unlikely to fade quietly.
No matter how you look at it, the U.S. is changing how it handles tech trade with other countries in a big way, and it’s happening quickly.