U.S. Government To Take Cut of Chip Sales to China

Summary

WSJ What’s News: Detailed Summary of "U.S. Government To Take Cut of Chip Sales to China"

Release Date: August 11, 2025
Host: Azhar Sukri
Podcast: WSJ What’s News by The Wall Street Journal

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1. U.S. Government Takes Cut of Chip Sales to China

Overview:
Two leading semiconductor companies, Nvidia and Advanced Micro Devices (AMD), have entered into agreements to allocate a portion of their sales revenue from artificial intelligence (AI) chips sold to China to the Trump administration. This arrangement marks a significant shift from traditional U.S. trade policies.

Key Details:

• Revenue Share: Both companies will provide 15% of their sales from Nvidia’s H20AI chips to China to the U.S. government as part of the export approval deal. (00:57)

• Unprecedented Deal: Peter Landers, Asia Business Editor, highlighted the uniqueness of this arrangement:

  "It's just from what I can remember, an unprecedented case of the government taking a portion of a commercial private sector company's revenue in exchange for allowing it to go ahead." (01:36)

• Shift in Trade Policy: This move represents President Trump's departure from traditional U.S. trade strategies towards a quid pro quo approach. Landers elaborated:

  "We've already seen a version of this in the tariffs that he's imposed on trading partners... this is sort of the same thing in reverse." (02:32)

Implications:

• Market Impact: By allowing the sale of advanced AI chips to China while extracting a 15% revenue share, the administration is setting a precedent that may influence future trade negotiations and government-private sector relations.

• Future Partnerships: This could pave the way for similar agreements across other industries, potentially reshaping international trade dynamics.

2. Intel CEO to Meet President Trump Amid Chinese Relations Tension

Overview:
Intel CEO Lipp Bhutan is scheduled to meet with President Trump in an effort to navigate the company's ties with Chinese businesses and address concerns related to national security.

Key Details:

• Meeting Purpose: Bhutan aims to present his personal and professional background to Trump, emphasizing Intel’s commitment to U.S. manufacturing and national security. (03:05)

• Context of Involvement: This meeting follows Trump's demand for Bhutan's removal due to perceived connections with Chinese enterprises.

Implications:

• National Security: The discussion underscores the critical role of semiconductor manufacturing in national security and the strategic importance Intel holds in the tech industry.

• Business Relations: Successfully securing Trump's approval could reinforce Intel’s position in the global market, particularly in relation to China.

3. Detention of Chinese Diplomat Liu Jianchao and Its Implications

Overview:
Liu Jianchao, a senior Chinese diplomat poised to become Foreign Minister, has been detained by Chinese authorities following his return from an overseas work trip.

Key Details:

• Circumstances of Detention: Liu was taken for questioning after his July trip to Singapore, South Africa, and Algeria. (04:06)

• Potential Impact: Chun Han Wong, a China reporter, suggests Liu’s detention may disrupt sensitive U.S.-China negotiations.

  "Since Liu cannot play this role, that could have some impact in how US China relations moves forward at this time." (04:29)

Implications:

• Diplomatic Relations: Liu’s absence may hinder ongoing diplomatic dialogues, potentially exacerbating tensions between the U.S. and China.

• Political Stability: The detention of a high-ranking diplomat could signal internal political shifts within China, affecting international perceptions and relations.

4. Israeli Airstrike Kills Al Jazeera Journalists and Netanyahu's Expanded Gaza War Plan

Overview:
An Israeli airstrike has resulted in the deaths of five Al Jazeera journalists, including Anas al Sharif, amid escalating military actions in Gaza.

Key Details:

• Target Confirmation: The Israeli military confirmed the strike targeted Anas al Sharif, accusing him of ties to Hamas's military wing. Al Jazeera denied these allegations. (04:29)

• Humanitarian Concerns: The Committee to Protect Journalists reports at least 180 journalists have been killed in Gaza since the war's inception nearly two years ago. (05:24)

• Netanyahu’s War Plan: Prime Minister Benjamin Netanyahu announced an expanded strategy to dismantle remaining Hamas strongholds in Gaza City and central refugee camps, aiming for a swift resolution.

  "Contrary to false claims, this is the best way to end the war and the best way to end it speedily." (06:40)

Implications:

• Media Freedom: The targeting of journalists raises serious concerns about press freedom and the safety of media personnel in conflict zones.

• International Criticism: Israel faces growing scrutiny over its military strategies and the resulting humanitarian impact on Gaza’s civilian population.

• Public Opinion: Despite international criticism, domestic polls in Israel show strong support for ending the Gaza conflict in exchange for the release of hostages held by Hamas.

5. Deepening Political Polarization in the U.S.: Gerrymandering and Redistricting

Overview:
The United States is experiencing heightened political polarization, characterized by aggressive redistricting efforts aimed at consolidating party control in various states. This divide leads to a perception of the U.S. functioning as two separate nations—red states and blue states.

Key Details:

• Gerrymandering Practices: President Trump is pressuring Texas to redraw congressional districts mid-decade to favor Republican candidates, potentially increasing their seats from 25 to 30 while reducing Democrat-held seats by five. (10:27)

• State-Level Control: Currently, 40 states are under single-party control, with most states exhibiting highly partisan governance structures. (08:55)

• Legal Challenges: Proposed redistricting moves are expected to face legal battles, including allegations of violating the federal Voting Rights Act and accusations of unfairness toward minority voters. (12:08)

Notable Quotes:

• Aaron Zitner on Polarization:

  "It’s leading to a sense that America is not a unified country, but really two nations, one red and one blue, sharing the same national borders." (08:37)

• Implications of Gerrymandering:

  "If this happens, America will only become more polarized and more separated and each party's congressional delegation will be more politically and partisanly uniform than before." (12:01)

Implications:

• Political Homogeneity: States controlled by a single party may pass more uniform and partisan laws, reducing bipartisan cooperation and increasing legislative gridlock at the federal level.

• Voter Representation: Gerrymandering undermines fair representation, potentially disenfranchising voters and skewing electoral outcomes to favor one party disproportionately.

• National Unity: The increasing divide between red and blue states exacerbates societal tensions, contributing to instability and reducing the effectiveness of national governance.

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Conclusion

The August 11, 2025 episode of WSJ What’s News delves into significant developments impacting global trade, international relations, media freedom, and domestic political dynamics in the United States. From the unprecedented agreement involving U.S. chip sales to China and heightened political polarization through aggressive redistricting, the episode underscores a period of substantial transition and tension both domestically and internationally. Additionally, the tragic targeting of journalists in Gaza highlights ongoing conflicts' broader implications on media and humanitarian conditions.

For listeners seeking a comprehensive understanding of these critical issues shaping today's world, this episode provides in-depth analysis and expert insights, ensuring they stay informed on the most pressing news affecting markets and geopolitical landscapes.

Transcript

[Viking Voice]

Viking committed to exploring the world in comfort. Journey through the heart of Europe on an elegant Viking longship with thoughtful service, cultural enrichment and all inclusive fares. Discover [e-mail].

[Azhar Sukri]

Business unusual Two of the world's top chip makers plan to pay the Trump administration a portion of their China sales. Plus an Israeli airstrike kills five journalists from the Al Jazeera network and we'll tell you why. Division between red and blue states is becoming deeper than ever, and it's leading.

[Aaron Zitner]

To a sense that America is not a unified country, but really two nations, one red and one blue, sharing the same national borders.

[Azhar Sukri]

It's Monday, August 11th. I'm Azhar Sugri for the Wall Street Journal. Here is the AM edition of what's news, the top headlines and business stories moving your world today.

[Peter Landers]

Foreign.

[Azhar Sukri]

For any company, Nvidia and Advanced Micro Devices say they will give the Trump administration a portion of the sales from their artificial intelligence chips to China. People familiar with the matter say the administration will receive 15% of the sales as part of a deal to approve exports for Nvidia's H20AI chips to China. Details of the arrangement are still being worked out, but as Asia Business editor Peter Landers explains, making companies pay to export products is very unusual.

[Peter Landers]

It's just from what I can remember, an unprecedented case of the government taking a portion of a commercial private sector company's revenue in exchange for allowing it to go ahead. I suppose it's one thing if the government had, for example, contributed some of the technology in the product, the government might ask for some royalties, but just for allowing the sales to go forward, the government asking 15%, that's not what the government usually does in a case like this. It either decides that these sales should be permitted from the perspective of national security and national interest and they take place, or it decides that it's not in the national interest and they don't happen at all. But this sort of 15%, 85% solution is a new one, so far as I can remember.

[Azhar Sukri]

And Peter says the arrangements with Nvidia and AMD represent part of Trump's departure from traditional US Trade policy to a so called quid pro quo instead.

[Peter Landers]

We've already seen a version of this in the tariffs that he's imposed on trading partners, including longtime US Friends like the European Union, Japan, South Korea and the way the president sees it, they should pay a fee as it were, a tariff in exchange for being permitted to access the large and lucrative US Market. And then this is sort of the same thing in reverse Nvidia is saying they would like to sell some of these advanced chips in China and Trump seems to have the idea that, okay, we can do that, but we need to receive a cut or something in return and that return would be 15% of the sales.

[Azhar Sukri]

Turning to another big chip maker now, and we are exclusively reporting that Intel CEO Lipp Bhutan is expected to meet with President Trump today. The visit follows Trump's call for his removal last week over ties to Chinese businesses. People familiar with the matter say Tan is expected to have a wide ranging conversation with Trump with the aim of explaining his personal and professional background. One of the people said Tan hopes to win Trump's approval by showing his commitment to the country and pledging the importance of keeping Intel's manufacturing capabilities as a national security issue. Meanwhile, we've learned that Liu Jianchao, a senior Chinese diplomat widely seen as a potential foreign minister, has been taken away by authorities for questioning. According to journal reporting, Liu was detained after returning to Beijing from a work trip overseas in late July. China reporter Chun Han Wong says the reasons for Liu's detention aren't clear.

[Chun Han Wong]

Liu Zheng Chao was taken away for questioning by authorities sometime after returning from a work trip overseas, which took place in late July. Official disclosures from the International Department showed that he visited Singapore, South Africa and Algeria late in July, and people familiar with the matter told us that Liu was taken away for questioning after returning from this trip.

[Azhar Sukri]

Chun Han says Liu's detention could leave a gap in China U S negotiations at a very sensitive time.

[Chun Han Wong]

Unlike his predecessors at the International Department, Liu Jian Chao has been more active in engaging Western governments, including the U.S. he visited the U.S. in early 2024, New York and Washington, where he met with business people, think tankers, Biden administration officials, and by all accounts those meetings were considered very positive. He came across as very engaging, willing to listen and address concerns about Chinese policies, and in that sense he was considered someone who could be a useful and influential interlocutor between the US And Chinese governments. And without him being able to play this role, that could have some impact in how US China relations moves forward at this time.

[Azhar Sukri]

An Israeli airstrike has killed five Al Jazeera journalists, including one of the most prominent reporting from Gaza. The Israeli military confirmed it targeted Anas al Sharif in a strike on Sunday night, accusing him of being a member of Hamas's military wing. The Al Jazeera Network, the most watched broadcast news channel in the Arab world, denied the allegations. Al Sharif had grown concerned for his safety in recent weeks after the Israeli military's Arabic language spokesperson alleged he was a terrorist. At least 180 journalists have been killed in Gaza since the war began almost two years ago amid what the Committee to Protect Journalists calls unsubstantiated claims by Israel that many were terrorists. It comes as Israeli Prime Minister Benjamin Netanyahu revealed that his new war plan for Gaza goes beyond what was originally announced last week. Speaking to reporters yesterday, Netanyahu said Israel's security cabinet approved a war plan to dismantle Hamas in Gaza City and central refugee camps. Previously, the prime minister's office had only mentioned that the military would prepare to take over Gaza City.

[Benjamin Netanyahu]

Last Thursday, Israel's cabinet Israel's security cabinet instructed the IDF to dismantle the two remaining Hamas strongholds in Gaza City and the central camps. Contrary to false claims, this is the best way to end the war and the best way to end it speedily. We will do so by first enabling the civilian population to safely leave the combat areas to designated safe zones. In these safe zones, they'll be given ample food, water and medical care, as.

[Azhar Sukri]

We'Ve done before, netanyahu's office said. He outlined the plans to President Trump in a phone call yesterday. The expansion of military efforts comes as Israel faces intense international criticism over the dire humanitarian situation in Gaza, while the far right wing of Netanyahu's coalition argues Israel is not going far enough. That said, months of polling have shown a large majority of the Israeli population support ending the Gaza war in exchange for freedom for the remaining hostages held by Hamas. Coming up, how the bitter fight over redrawing U.S. house maps is eroding American unity. That story after the break.

[Viking Voice]

This message comes from Viking, committed to exploring the world in comfort. Journey through the heart of Europe on an elegant Viking longship with thoughtful service, destination focused dining and cultural enrichment on board and on shore. And every Viking voyage is all inclusive, with no children and no casinos. Discover [e-mail].

[Azhar Sukri]

The race to maximize each party's control of House seats, touched off by President Trump's demand that Texas redraw its congressional districts, is just one example of deepening division between red and blue states. In fact, some observers are describing the growing polarization as a type of civil war. Aaron Zitner leads the Journal's polling coverage. Aaron, we've talked about how polarized the U.S. is for many years now. So what's leading some to describe what we're seeing now as some kind of civil war?

[Aaron Zitner]

Well, we're used to seeing the fight between Democrats and Republicans play out in Congress where the two parties are just about evenly matched in the House. But when you look at the state level, we really have this division of red and blue. And it's pretty much at peak polarization. And it's leading to a sense that America is not a unified country, but really two nations, one red and one blue, sharing the same national borders. And this is because in 40 states now, a single party controls all the levers of government. And almost all, all of those 40 states, one party controls the House, the Senate and the governor's office. But there are a couple of states where you have a Democratic governor, but a super majority Republican legislature. So the legislature essentially runs the whole state and can override the governor's veto. And what that means, when I ran the math, I find that only 20% of people today live in a state where the two parties share power. And if you roll back two years, only 16% of people lived in a state where the two parties Share power and where the minority party has any meaningful share in governance. And the consequence of that is the states are falling like dominoes when it comes to policy, with red states all falling in one direction and blue states falling in another.

[Azhar Sukri]

So an example of just how polarized states are becoming seems to be playing out in Texas right now. Tell us more about that.

[Aaron Zitner]

Well, in Texas, which is what we call a Republican trifecta state, and there are, I think, 38 trifecta states right now where one party has control of the House and the Senate and the governor's office. And states traditionally draw their lines for House districts once every decade following the census so that these new lines can reflect shifts in the population. But President Trump is pressuring the state of Texas to redraw its maps in the middle of the decade after they already drew their maps a couple of years ago following the 2020 census. And he wants them to redraw their maps because right Now Republicans hold 25 of the congressional seats. In Texas, it's possible to draw maps that give Republicans an advantage in 30 seats and to strip Democrats of five seats that they have. And that will help Donald Trump preserve the Republican majority in the House of Representatives. Well, now what we have is a series of threats of tit for tat redrawing of the maps where Republicans in Florida, Ohio, Missouri, and of course, Texas may redraw their maps to try to pick up more Republican seats and deprive Democrats of seats they have. And in turn, California, Illinois and other Democratic led states are saying, we're not going to let this happen without us. Responding. We're going to redraw our maps. If this happens, America will only become more polarized and more separated and each party's congressional delegation will be more politically and partisanly uniform than before.

[Azhar Sukri]

I presume there are going to be legal challenges to all of this. So are these redistricting moves actually going to go ahead?

[Aaron Zitner]

There are surely going to be legal challenges, some of them under the federal Voting Rights act, which speaks to the racial makeup of districts. There'll be challenges that say some of these new maps are unfair to minority voters, and there are going to be challenges on other legal grounds. The irony here is voters really don't like gerrymandering and many states have passed laws and constitutional amendments to say the state lawmakers should either give the process to a non partisan commission or should not be unduly partisan when they draw these maps. But lawmakers in these states tend to ignore these laws. Even in Utah, which passed an anti gerrymandering law just a few years ago, legislators ignored it and drew a highly partisan map in that state. Florida has a pretty strong anti gerrymandering provision in its state constitution, but the lawmakers tend to ignore it and then it falls to the state courts to decide how far it's going to go to enforce what the voters have asked for in those states.

[Azhar Sukri]

Aaron Zitner leads the Journal's polling coverage. Thank you so much, Aaron.

[Aaron Zitner]

Good to be with you.

[Azhar Sukri]

Before we go, a heads up that we've got a bonus episode coming later today. In the next what's news in earnings. We'll be looking at the earnings reports of some asset managers and discuss why their shares have lagged the broader market and what could reverse that. That'll be in the feed around midday. And then we'll have our usual PM show tonight. And that's it for what's news this Monday morning. Today's show was produced by Daniel Bark. Our supervising producer is Sandra Kilhoff. I'm Azhar Sukri for the Wall Street Journal. We'll be back tonight with a new show. Until then, thanks for listening.