Bernstein criticizes NVIDIA and AMD for the 15% revenue-sharing agreement on chips to China, calling it a dangerous precedent, but admits that "85% is better than 0."
Bernstein analysts expressed disapproval of the agreement requiring NVIDIA and AMD to pay 15% of their AI chip sales revenue to the U.S. government, stating that it sets a bad precedent, but also acknowledged that "getting 85% is better than 0." The analysts believe it is more reasonable to allow the two companies to sell AI chips to China, although a 15% concession is unavoidable. They questioned the purpose of the agreement, suggesting it might shift costs to customers, and pointed out that NVIDIA is developing new products for the Chinese market, which may not be affected by this agreement
According to the Zhitong Finance APP, Bernstein analysts hold a negative view on the report that NVIDIA (NVDA.US) and AMD (AMD.US) must pay 15% of their AI chip sales revenue to the U.S. government in exchange for export licenses, believing that this agreement sets a bad precedent, but they also acknowledge that "getting 85% is better than getting nothing."
The analyst team led by Stacy Rasgon believes that allowing NVIDIA and AMD to sell AI chips to China is more reasonable.
Rasgon and his team stated, "Therefore, even if we have to give up 15%, we believe that keeping 85% is better than nothing at all, and we can only accept this outcome. That said, we do not agree with the precedent set by this agreement (will this model only apply to regulated products? Will other companies also be required to pay to enter the regional market? In our view, this seems like a dangerous slippery slope...)."
The analysts added that they are uncertain about the purpose of this agreement: it may bring some revenue to the U.S. government, but it does not seem to address any strategic issues.
The analysts pointed out that the relevant companies are likely to pass this cost onto customers, especially NVIDIA, whose product demand is strong and whose order scale far exceeds that of AMD.
Rasgon's team mentioned that NVIDIA is developing new products for the Chinese market based on the Blackwell architecture, which are reportedly compliant with existing technology thresholds (thus not requiring export licenses), and NVIDIA seems to believe that over time, market demand will shift towards these new products (rather than the existing Hopper architecture products).
The analysts further stated, "The news reports we have seen explicitly mention H20 (as well as AMD's MI308), and the 15% share seems to be part of the approval for its export license agreement. Therefore, the updated (compliant) Blackwell products may not be affected by this, and this speculation is reasonable."
