Why Nvidia and AMD’s unusual agreement with the Trump administration might survive any legal challenges

There is one glaring issue with the highly unusual arrangement that’s seen Nvidia and Advanced Micro Devices secure export licenses to China for chips that had previously faced restrictions in return for giving the US government 15% of the revenues generated by those sales:

Legal experts say it is of very dubious legality, to put it mildly.

“No matter the substantive merits of that pushback — this and other potential future deals like it are unlikely to be struck down by the courts (and sales and government revenue thereby interrupted) anytime soon,” George Pollack, a senior US policy analyst at Signum Global Research, wrote.

The first reason is the issue of standing, or rather, who can claim to have been hurt by this agreement.

Here are two people with law degrees discussing this very point, and one person who has watched “Law & Order” musing about the potential for this to end up in the courts.

(I would be very amused by Nvidia and/or AMD shareholders arguing that they’ve suffered from management agreeing to the 15% fee and not being able to benefit from what the full sales, not just 85% of them, would mean for those companies’ bottom lines and their potential returns.)

Pollack argues that Nvidia and AMD themselves would be unlikely to pursue a legal battle (given, you know, they agreed to this), and that Congress, trade associations, or the state of California would face difficulties getting a court to see things their way.

Secondly, the analyst flagged that there are two potential technical loopholes the Trump administration could turn to in order to avoid having this deal overturned by the courts:

1. The chips themselves are physically not produced in the US, so “they do not technically qualify as ‘exports’ in the constitutional sense,” he wrote.

2. “The 15% revenue share is entered into voluntarily by the companies, it is therefore not a mandated ‘fee’,” he noted.