TL;DR:
• Nvidia and AMD agreed to pay 15% of China chip revenues to US government
• Apple CEO Tim Cook committed $600B in US investment over four years
• Trump threatens 100% tariffs on chip imports, exempting companies "building in the United States"
• Analysts expect more Big Tech companies to strike similar deals
Nvidia and AMD just made unprecedented deals to pay the Trump administration 15% of their China chip revenues, while Apple pledged $600 billion in US investment. These extraordinary arrangements reveal how desperate Big Tech has become to avoid crippling tariffs that threaten their core businesses.
Nvidia and AMD just struck deals that would have been unthinkable six months ago. The chip giants agreed to hand over 15% of their China revenues to the US government in exchange for continued access to the world's second-largest economy. It's a arrangement that some strategists are calling a "shakedown," while others question whether it's even constitutional.
The White House confirmed the unprecedented revenue-sharing agreements just days after Apple CEO Tim Cook made his own pilgrimage to the Oval Office, emerging with plans to increase the company's US investment commitment to $600 billion over four years. The move was widely seen as Cook's bid to keep Apple out of Trump's tariff crosshairs—and it appears to have worked.
"The flurry of deal-making is an effort to secure lighter treatment from tariffs," Paolo Pescatore, technology analyst at PP Foresight, told CNBC by email. "In some shape or form, all of the big tech companies have been negatively impacted by tariffs."
The urgency behind these deals becomes clear when you look at the numbers. Apple alone incurred $800 million in tariff costs in the June quarter, while Trump has threatened to impose a 100% tariff on semiconductor imports—a move that would devastate companies relying on Asian manufacturing.
For Nvidia, the 15% revenue cut represents a calculated trade-off. China remains crucial for the AI chip leader's growth trajectory, especially as demand for data center GPUs continues surging globally. "Both Nvidia's Jensen Huang and Lisa Su at AMD both decided that OK, we've got a way to get our chips into China and maybe there is something good coming out of it," Ray Wang, founder of Constellation Research, said on CNBC's Squawk Box.
But the arrangement has sparked intense debate about precedent and constitutionality. White House spokesperson Karoline Leavitt admitted Tuesday that the legality and mechanics of the 15% export tax were "still being ironed out." She also hinted that similar deals could expand to other companies—a prospect that has investors nervous about arbitrary government intervention.
Wang described the situation as "bizarre," noting the uncertainty over whether these chips even represent a national security issue. "If the answer is no, fine OK. The government is taking a cut out of it," he said. But the lack of clear policy framework has some questioning whether every president will now "play kingmaker" with corporate deals.
Apple's $600 billion commitment, meanwhile, appears designed to secure long-term tariff relief through domestic investment rather than revenue sharing. The iPhone maker has long been considered among the most vulnerable Big Tech firms to US-China trade tensions, given its complex supply chain and reliance on Chinese manufacturing.
Pescatore expects Apple's accelerated US investment to trigger "a domino effect" within the industry, as other tech giants scramble to demonstrate their American credentials. The alternative—facing Trump's proposed tariffs—could prove far more expensive than these preemptive deals.
Investors initially welcomed the arrangements as securing continued China market access, but concerns are mounting about policy unpredictability. "The bigger thing for me is do you have some stability of policy? Do you have a policy one week and then it flips the next?" Dan Niles, founder of Niles Investment Management, told CNBC's Closing Bell on Monday.
These extraordinary deals signal a new era where Big Tech must pay for political access rather than simply lobby for it. As Trump's tariff threats reshape global trade, expect more tech giants to choose costly accommodation over potentially devastating trade wars. The question isn't whether other companies will follow suit, but how much they'll have to pay for the privilege of doing business globally.
