WSJ What’s News - U.S. Government To Take Cut of Chip Sales to China

Episode Date: August 11, 2025

A.M. Edition for Aug 11. In a highly unusual deal, chip giants Nvidia and AMD will give the Trump administration 15% of their AI chip sales to China. Plus, Israel’s military kills five Al Jazeera journalists in Gaza, according to the network. This comes as Prime Minister Netanyahu revealed his new war plans include fighting in refugee camps. And, WSJ editor Aaron Zitner explains why the division between red and blue states is becoming deeper than ever. Azhar Sukri hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Business unusual, two of the world's top chipmakers 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 to a sense that America is not a unified country, but really two nations. one red and one blue sharing the same national borders. 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. In a pretty unorthodox move for any company, NVIDIA and advanced micro devices say they will give the Trump administration a portion of the sales from their artificial intelligence. 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 H20 AI 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.

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 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. And Peter says the arrangements with NVIDIA and AMD represent part of Trump's departure from traditional U.S. trade policy to a so-called quid pro quo instead.

We've already seen a version of this in the tariffs that he's imposed on trading partners, including longtime U.S. 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 U.S. 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. Turning to another big chip maker now, and we are exclusively reporting that Intel CEO,

Lip 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 Jianchow, 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 Wang says the reasons for Liu Zedenthal 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 of the matter told us that Liu was taken away for questioning after returning from this trip. Chen Han says Liu's detention could leave a gap in China-U.S. negotiations at a very sensitive time. Unlike his predecessors at the International Department, Liu Jian Chao has been, more active in engaging Western governments, including the US. He visited the US 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 U.S. and Chinese governments, and without him being able to play this role, that could have some impact in how U.S.-China relations moves forward at this time. 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 186 journalists have been killed in Gaza since the war began almost two years ago. Amir 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. 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 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. The race to maximize each party's control of house seats touched on. by President Trump's demand that Texas redraw its congressional districts is just one example of deepening divisions between red and blue states. In fact, some observers are describing the

growing polarization as a type of civil war. Aaron Zittner 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? 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.

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

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. I presume there are

going to be legal challenges to all of this. So are these redistricting moves actually going to go ahead? 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 nonpartisan 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-jerrymandering law just a few years ago, legislators ignored it and drew a highly partisan map in that state. Florida has a pretty strong anti-jerrymandering 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. Aaron Zittner leads the journal's polling coverage. Thank you so much, Aaron. Good to be with you. 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 Sukhri for the Wall Street Journal. We'll be back tonight with a new show. Until then, thanks for listening.