Nvidia and AMD reportedly will give U.S. government 15% of its China chip revenues

Comments

• Mark

  August 10 edited August 10

  Hard to decide what's creepier, that or the CEO's/companies willing to do it. Same as the mafia only different.
• JD_co

  August 10

  What creeps me out is that nobody is calling out the overreach of the new regime.
• WABAC

  August 10

  And how much to the "presidential library" fund?
• Observant1

  August 10 edited August 10

  What about national security concerns?
• Observant1

  August 10 edited August 10

  "What creeps me out is that nobody is calling out the overreach of the new regime."
  
  Many members of Congress have abdicated their responsibilities to check the executive branch.
  They either don't have the decency or the courage to challenge the "faux king."
  These politicians should step aside if they are unable to execute their duties.
  The chances of this are slim-to-none but perhaps voters will remove them from office after mid-term elections.
• JD_co

  August 10

  The message is clear - kickbacks are appreciated, and there is no shame.
• Old_Joe

  August 10

  DJT has debased DC to a f---ing mafia.
• yogibearbull

  August 10 edited August 10

  Start of a new License Raj.
  Raj means to rule or govern.
  This was common in old India but they never went beyond low official fees supplemented by high under-the-table gifts or considerations.
  But % cut of revenues is fantastic!
  
  Edit/Add. It may also be considered as an export tax.
• hank

  August 10 edited August 10

  d

  yogibearbull said:

  It may also be considered as an export tax.

  Yes. If it walks like a duck and squaks like a duck …
  
  
• Derf

  August 10

  Will this cut of 15% cause the value of the stock to drop by 15% or more?!
• msf

  August 10 edited August 10

  hank said:

  yogibearbull said:

  It may also be considered as an export tax.

  Yes. If it walks like a duck and squaks like a duck …
  

  Then it's an unconstitutional duck.

  Article I, Section 9, Clause 5:
  
  No Tax or Duty shall be laid on Articles exported from any State.

  https://constitution.congress.gov/browse/essay/artI-S9-C5-1/ALDE_00013596/

  Scope of the Prohibition
  The Export Clause is an absolute prohibition on taxing exports by the federal government. ...
  
  The Clause prohibits any federal tax or duty that is imposed on goods during “the course of exportation” or targeted at exports, as well as those imposed on services and activities “closely related” to the export process. ...
  
  Importantly, the Clause does not prohibit a generally applicable tax from being imposed on goods prior to export.
  

  https://sgp.fas.org/crs/misc/R42780.pdf
  
  For a nice summary of the historical background and compromise behind this clause of the Constitution, the first part of this SC case is an easy read:
  https://www.taxnotes.com/research/federal/court-documents/court-opinions-and-orders/fifth-circuit-affirms-crude-oil-export-tax-violates-constitution/7d9x0
  
• hank

  August 10 edited August 10

  Derf said:

  Will this cut of 15% cause the value of the stock to drop by 15% or more?!

  Normally it should have some adverse effect, but stocks only go up these days. If this extortion scheme works, what other U.S. companies may need to pay-up? In normal markets that overhanging threat might affect many other exporters who are potential targets (aircraft, auto, Ag, etc.) But due to the ever-higher stock market … no worry. However, tomorrow might be an interesting market day as the ramifications sink in. Investors might say - - ”Duck!”
  
  I did not realize export taxes were prohibited until @msf noted that. Looks like maybe another case headed for the courts …
• Crash

  6:19AM

  Utterly despicable. As has been noted, the Orange Puke has no conception of what government is; he only sees the benjamins. This is by now a mafia-ocracy, like Putin's Russian gov't. Don't tell me you think that's a coincidence.
• Anna

  7:20AM

  Well I guess this can be achieved by selling an equivalent amount of US bonds (which, of course, if they hold).
• yogibearbull

  8:50AM edited 8:52AM

  Bloomberg article via MSN points out that this "chip-tax" may weaken Administration's defense of tariffs under a national emergency in the other lawsuit. Other countries may not play this game or respond similarly. This is beyond the legal aspects cited by @msf.
  https://www.msn.com/en-us/money/other/nvidia-amd-to-pay-us-15-of-china-ai-chip-sales-in-unusual-move/ar-AA1KgiKp
• gman57

  10:17AM edited 10:18AM

  Soooo,, we decide to not sell chips to China for national security reasons BUT if you pay us money we will allow it, F' national security. WOW, I think Marx said this and it seems to be true, give the west enough rope and they'll hang themselves or was it the capitalist will sell us the rope to hang them with.
• Observant1

  11:01AM edited 11:02AM

  "The U.S. official said the Trump administration did not feel the sale of H20
  and equivalent chips was compromising national security."
  
  "It's wild," said Geoff Gertz, a senior fellow at Center for New American Security,
  an independent think tank in Washington, D.C.
  'Either selling H20 chips to China is a national security risk, in which case we shouldn't be doing it
  to begin with, or it's not a national security risk, in which case, why are we putting this extra penalty
  on the sale?'"
  
  "Alasdair Phillips-Robins, who served as an adviser at the Commerce Department
  during former President Joe Biden's administration, criticized the move.
  'If this reporting is accurate, it suggests the administration is trading away national security protections
  for revenue for the Treasury,' Phillips-Robins said."
  
  "Nvidia generated $17 billion in revenue from China in the fiscal year ending January 26,
  representing 13% of total sales. AMD reported $6.2 billion in China revenue for 2024,
  accounting for 24% of total revenue."
  
  "Giving away some revenue from these chips to the U.S. government would bring the gross margins
  for these processors down by 5 to 15 percentage points, resulting in an impact of 'a point or so'
  to their overall gross margins, Bernstein analysts said in a note."
  
  https://www.reuters.com/world/china/nvidia-amd-pay-15-china-chip-sale-revenue-us-official-says-2025-08-11/
• msf

  12:40PM

  Cost of an import/export license in the US
  
  You generally don’t need to pay any fees to get an import/export license in the US.
  
  The procedure for obtaining a trade permit depends on the agency you are dealing with. For imports, most PGAs only require you to complete the necessary forms and adhere to their trade guidelines. For exports, BIS [Bureau of Industry and Security] doesn’t need you to pay for a license.
  

  https://www.maersk.com/logistics-explained/customs-and-compliance/2023/09/27/us-import-export-license-what-it-is-and-how-to-get-it
  
  Why charge these deep pocketed companies such exorbitant fees? Just ask a bank robber (though not Willie Sutton): that's where the money is.
  
• DrVenture

  1:36PM edited 1:37PM

  Observant1 said:

  What about national security concerns?

  That really hits the mark. If they really cared about national security, no amount of kickback would be enough.
  
  And it is impossible to overlook that this is another huge tax on doing business. Whine about the roadblock that our companies have to endure to sell into the Chinese market. Then impose even more roadblocks on those same businesses. These companies are now less profitable business ventures.
  
  The "low tax" folks, now are loving higher taxes. Bring 'em on!
  We are going to heavily tax the rich next, right? To fill the coffers? For the greater good?
  A quick executive order should get the job done.
  
  Remember when the whole narrative was that if you tax businesses or high net worth investors, they will stop spending, or leave the country? What a fracking hoot! Another right-wing myth shot directly in the Trump.
  
  
• Mark

  1:38PM

  Great comment DrV
• DrVenture

  1:39PM

  yogibearbull said:

  Bloomberg article via MSN points out that this "chip-tax" may weaken Administration's defense of tariffs under a national emergency in the other lawsuit. Other countries may not play this game or respond similarly. This is beyond the legal aspects cited by @msf.
  https://www.msn.com/en-us/money/other/nvidia-amd-to-pay-us-15-of-china-ai-chip-sales-in-unusual-move/ar-AA1KgiKp

  What happens when the left hand has no idea what the right hand is doing. Conflicting policies that undermine the narrative.
  
  
• DrVenture

  1:43PM

  hank said:

  Derf said:

  Will this cut of 15% cause the value of the stock to drop by 15% or more?!

  Normally it should have some adverse effect, but stocks only go up these days. If this extortion scheme works, what other U.S. companies may need to pay-up? In normal markets that overhanging threat might affect many other exporters who are potential targets (aircraft, auto, Ag, etc.) But due to the ever-higher stock market … no worry. However, tomorrow might be an interesting market day as the ramifications sink in. Investors might say - - ”Duck!”
  
  I did not realize export taxes were prohibited until @msf noted that. Looks like maybe another case headed for the courts …

  My thinking is that outsized upward expectations, will be matched when the downside expresses itself.
  
  And, excellent point by @msf. I never knew that either.
  
  
• hank

  2:04PM edited 2:08PM

  Maybe this pay-to-play scheme (export tax) is the real reason Tim Cook cozied-up at the White House a few days ago. Are there any prohibitions on what Apple can sell to China? If so, might there be ongoing negations now of the type NVDA seems to have carried out? Name the price. Apple’s pretty big. Maybe 25%?
  
  I agree with Dr. V - The market seems to run on something other than valuation or growth prospects these days. More of a barometer of investor appetite. The hungrier the crowd, the more the needle points upward. Hell to pay someday. But when?