Good morning, Nicholas Gordon, Fortune’s Asia editor, filling in for Alyson.
This week’s biggest tech story is Trump’s unprecedented decision to let Nvidia (No. 31 on the Fortune 500) and AMD (No. 167) sell their advanced AI chips to China—in exchange for a 15% cut of their China sales. Trump officials say the move will keep Chinese companies hooked on U.S. products; critics blast it as putting a price on U.S. national security. (Another problem: It may be unconstitutional.)
From my desk in Hong Kong, Trump’s move is something else: a halt to a tech decoupling that’s been building since 2022, when the U.S. first slapped chip controls on China.
What was once a clear (if debatable) argument for export controls—don’t sell China advanced chips, the better to preserve the U.S. lead in AI—looks murkier. As Jennifer Lind, an associate professor at Dartmouth, told me this week, the deal suggests that “what gets banned or permitted is not being driven by careful calculations about the effect on Chinese military power—but rather on political whim and personalist politics. This is ruinous for a functioning export control regime.”
China is trying to develop its own advanced chips—with some limited success. (Treasury Secretary Scott Bessent brought up these concerns Wednesday, warning that he didn’t want “Huawei to have a digital Belt and Road.”) And Chinese AI developers keep impressing outside observers with what they can do with limited resources.
This isn’t just a U.S.-China discussion. The chip supply chain is a global one: The companies that make Nvidia chips—and make the tools that make the Nvidia chips—are based in economies like Taiwan, Japan, South Korea, and the Netherlands, all long-time U.S. allies.
Bessent is already suggesting the Nvidia-AMD deal is a “beta test” for other industries. And the Trump administration is reportedly thinking about taking a stake in U.S. chipmaker Intel (No. 86).
Fortune’s reporters and editors—on both sides of the Pacific—will be watching this space.
—Nicholas Gordon, Asia editor
