Good morning. Andrew here. President Trump is now allowing Nvidia to sell its H200 chips to China — and U.S. taxpayers could take a 25 percent cut of every sale. By connecting the issue of national security to tax revenue, the administration has created an obvious question: Is national security for sale? It is also possible that China will prevent or slow the sale of such chips to favor its own semiconductor manufacturers, so we’ll see how this plays out. Also: We take a look at the latest twist in the battle to buy Warner Bros. Discovery and at a new $12 billion rescue package for U.S. farmers. (Was this newsletter forwarded to you? Sign up here.)
Nvidia’s lobbying pays offShares in Nvidia are climbing in premarket trading this morning after President Trump allowed the company to resume selling some powerful artificial intelligence chips to China — with the federal government slated to take a cut. It’s a huge win for Jensen Huang, Nvidia’s C.E.O., who lobbied hard for the move. But Trump’s shift also raises big questions about Washington’s approach to the A.I. race with Beijing — and new reporting suggests that China doesn’t necessarily want this. Semiconductors continue to loom large in the U.S.-China trade clash, given widespread fears in Washington about giving Chinese companies access to top American tech. Trump sought to play down national security concerns, saying that only approved customers would get the chips, which are older generation H200s. (Left unsaid: Chip smuggling is a continuing problem.) The Commerce Department is still finalizing the details, Trump added, and similar arrangements could be extended to rival U.S. chipmakers like AMD and Intel. Lawmakers in both parties were skeptical. “Nvidia should be under no illusions — China will rip off its technology, mass-produce it themselves and seek to end Nvidia as a competitor,” Representative John Moolenaar, the Michigan Republican who leads the House Select Committee on China, told Reuters. Democrats on the Senate Foreign Relations Committee also criticized the move, saying that “gifting” the chips “to Beijing would squander America’s primary advantage in the A.I. race.” All of this assumes that Chinese companies want these chips. Nvidia’s H200 is a step down from the Blackwells that American A.I. giants are clamoring for. (The even more advanced Rubins are expected to go on sale next year.) Beijing has pressed Chinese tech companies to wean themselves off American technology and instead use homegrown counterparts. That push has helped drive up shares in Moore Threads, a newly public Chinese chipmaker. That said, H200s are much more powerful than the H20 chips that Nvidia can sell in China, let alone Chinese-made rival products. (Some Chinese companies are reportedly even training their A.I. models abroad to gain access to Nvidia chips unavailable at home.) In his announcement on social media, Trump wrote that China’s top leader, Xi Jinping, “responded positively!” to the chips policy update. For now, however, Beijing is set to limit Chinese companies’ access to H200s, according to The Financial Times. How much will the U.S. benefit from the arrangement? Trump wrote that the federal government would take a 25 percent cut of the H200 sales. The condition may have been floated to win over skeptical lawmakers. But some experts question the legality, The Times reports.
The Supreme Court appears poised to expand executive power. The court heard arguments yesterday in a case over whether President Trump can fire a member of the F.T.C. The conservative majority seemed open to the administration’s desire to overturn a decades-old decision — Humphrey’s Executor — that protected independent agency leaders from being dismissed at will. That said, Brett Kavanaugh, a conservative justice, expressed concerns about giving the president the power to fire members of the Fed, setting up a showdown next month in a related case involving Trump’s attempt to fire Lisa Cook, a central bank governor. Disney extends Jimmy Kimmel’s contract. Months after the late-night host was temporarily suspended over his comments about the killing of the conservative activist Charlie Kirk, Disney has renewed “Jimmy Kimmel Live!” for another year. But the terms are notable (some of Kimmel’s past contract extensions were for three years), with the shorter duration possibly reflecting the difficult economics around late-night television and the continued clashes between President Trump and Kimmel. PepsiCo makes operational cuts to appease an activist investor. The food giant struck an agreement with Elliott Investment Management in which it committed to cut prices and simplify its product line as it tries to reinvigorate growth. (PepsiCo may also be paving the way for layoffs.) The agreement comes after Elliott unveiled a roughly $4 billion stake in the company in September. The E.U. investigates Google over artificial intelligence. The European Commission today opened an inquiry into whether the tech giant had broken E.U. rules by using web content to develop its A.I. models without paying publishers appropriately. It is also investigating whether Google had breached bloc competition rules by imposing unfair terms on publishers and content creators. The E.U.’s tough regulatory stance has been a key point of friction with the Trump administration. Paramount and presidential diplomacyA Hollywood takeover war for the ages is officially on, as Paramount takes its $78 billion takeover bid for Warner Bros. Discovery directly to its target’s shareholders. Paramount’s argument isn’t just that it is offering more money than Netflix. It’s also arguing that it has more pull with President Trump — influence exerted by direct connections with the decider in chief. Trump has said the quiet part out loud, declaring that he would “be involved” in deciding the fate of the Netflix deal. It’s another example of him breaking Washington norms, in which regulatory decisions are typically done at arm’s length from the Oval Office. Remember that when AT&T was seeking to buy Time Warner during the first Trump administration, the Justice Department argued that its effort to block the deal was “based on the facts and the law” — and not because the president disliked CNN. Paramount laid out plenty of Trump influence cards yesterday. In its camp are:
“We have faster regulatory certainty to close,” David Ellison declared on CNBC yesterday. Both Paramount and Netflix sought to appeal directly to Trump:
There are benefits and drawbacks to having Trump decide. It’s clearly easier to lobby one person, whose political and personal likes are well known. But it’s also easy to run afoul of him: Trump fumed yesterday about “60 Minutes” and blamed the owners of the show’s network, CBS — meaning Paramount and the Ellisons. “THEY ARE NO BETTER THAN THE OLD OWNERSHIP,” he wrote on social media. Now Paramount and Netflix must race to win over Trump, who often likes people competing for his blessing. “None of them are particularly great friends of mine,” he told reporters about both companies at the White House yesterday.
Trump bails out farmersThe Trump administration announced a $12 billion rescue package for U.S. farmers yesterday, seeking to bandage a wound inflicted by its trade war with China and mollify key voters in red states heading into next year’s midterm elections. “We love our farmers,” President Trump said at a White House event to announce the payments. “And, as you know, the farmers like me.” That second assertion has recently been tested. Caught in the middle: After the U.S. imposed steep tariffs on its goods this year, China, the largest buyer of American soybeans, retaliated by halting purchases of U.S. farm products. The move has had a devastating impact on farmers, The Times reports: American farmers, a key voting bloc for Mr. Trump, have been warning of the worst crisis since the 1980s as China turned to Brazil, Argentina and other markets for food products. The one-time payment from Washington won’t make up for this year’s losses: Shawn Arita, a senior research economist at North Dakota State University, estimates crop producers will lose between $35 billion and $43 billion on what they just harvested this fall, as the trade war with China is not their only problem. The cost of key supplies has been rising for years, and interest rates on their production loans remain high. The prices farmers are receiving on the world market for most crops are below what they spend to produce them. Déjà vu: Beginning in 2018, the first Trump administration paid out more than $20 billion in aid to U.S. farmers after China boycotted American products, including soybeans, in response to tariffs. When a trade deal was reached in 2020, Beijing committed to purchasing $200 billion of farm products through 2021. It never fully met that goal. China’s latest promise: In October, as part of the trade deal between Washington and Beijing, China agreed to buy 12 million metric tons of soybeans by the end of the season, and another 25 million metric tons in each of the next three years. At the DealBook Summit last week, Treasury Secretary Scott Bessent said China was “in a perfect cadence to complete that goal” by the end of February. So far, though, China has purchased just 2.7 million metric tons of soybeans, according to the Agriculture Department. Oh, Deere: At Monday’s event, the president also called on equipment makers like John Deere to reduce their prices “because farming equipment has gotten too expensive.” Shares of Deere finished the day down 1.8 percent. We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
Deals
Technology and artificial intelligence
Best of the rest
|
