In a move that could potentially disrupt the global semiconductor supply chain, President Donald Trump has allowed Nvidia Corporation (NASDAQ:NVDA) and Advanced Micro Devices, Inc. (NASDAQ:AMD) to export AI processors to China.

What Happened: The deal, which involves Nvidia and AMD sharing a portion of their sales with the U.S., could have far-reaching implications.

These chips, while designed and sold by U.S. companies, are manufactured by international firms, including Taiwan’s TSMC, Netherlands-based ASML, and South Korea’s SK Hynix.

As per the report by Fortune, the U.S. has previously urged these companies to limit their engagement with China, especially following the enactment of the CHIPS Act and the expansion of U.S. chip-export controls in 2022.

The decision has sparked debates within the U.S. about the implications for China’s access to advanced U.S. technology. However, other countries and companies are likely scrutinizing the deal to see if it could open doors for them to sell to China as well.

The decision indicates that national security concerns may not be the primary issue with export controls, according to Mario Morales of IDC. He suggests that companies and countries might need to reassess their strategies and potentially diverge from U.S. policies.

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The Joe Biden administration had previously expended significant diplomatic effort to convince allies to limit their semiconductor exports to China.

However, the new deal could weaken these export controls further, with China potentially demanding a rollback of chip sanctions as part of future negotiations with the U.S.

Paul Triolo of the DGA-Albright Stonebridge Group suggested that U.S. allies might welcome a major step back from controls.

He also highlighted concerns about enforcement of controls over the transfer of Nvidia GPUs, suggesting that the Commerce Department lacks the resources to track GPUs globally.

While some analysts believe the export control regime will not completely unravel, the decision has undoubtedly stirred the global semiconductor industry and could lead to significant changes in the future.

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