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Two of the largest companies in the world, Nvidia and AMD, agreed to pay 15% of their revenue from chips and semiconductor sales in China. This Agreement may be regarded as a win-win for technology groups and the US government, as it allows NVIDIA and AMD to expand their market share for their products, allowing the US to collect more than $ 3 billion more to increased income from export activities. This new type of revenue collection is not a tax, as is usually defined. However, it seems to be a form of export tax and its framework presents a possible new opportunity for Trump’s administration to increase additional revenue that would otherwise not have previously collected. This article examines the key elements surrounding this new new trade agreement on Nvidia and AMD with Trump and the direct and indirect consequences of such an agreement on both companies and beyond.
Nvidia and AMD market domination
Nvidia and AMD are today two of the largest companies in the world, ranking 31st and 167th In the Fortune 500 list, respectively. It is important that they are one of the largest manufacturers of computer chips in the world, which have become increasingly important and valuable, as these products now appear on many devices, from obvious items such as computers and smartphones on less obvious objects such as vehicles and devices. In addition, the use of privately owned technology has become an even more strategic advantage, as people have entered the explosion of artificial intelligence, which is largely dependent on advanced brands.
NVIDIA and AMD are among the two most important manufacturers of these chips, which contribute to the use of advanced computer science. This technological breakthrough has been achieved by securing a significant market share of the graphics processing plants and a central role in enhancing processing power to promote and adapt to artificial intelligence, according to Technological support.
While this technology is valuable, the US limits the ability of companies to sell these products to those outside the US, especially China. Although there are chip manufacturers outside the US, the quality of their products may not be the same, creating a natural demand for companies such as Nvidia and AMD expanding their sales to these other countries.
Trump’s export export agreement with Nvidia and AMD
As was first mentioned by Financial timesNvidia and AMD have agreed to pay 15% of their revenue from semiconductor and chip sales in China in exchange for specific export licenses that allow companies to transfer their products abroad. This deal is for NVIDIA’s H20 chips and AMD’s Mi308 chips. This announcement comes after the filling of Nvidia with a ban in April to send these H20 chips to China. Yahoo! Finance It says the cost of the previous ban on the company billions of lost revenue and the new deal will result in up to $ 3 billion in growing collections in the US government.
Billionaire Mark Cuban reacted to this Agreement X with the following statement:
Each DEM should thank @potus to do what the Dems dreamed, but they never managed to do, creating a sales tax in 2 of the largest semi -hosts in the country! This opens the door to sales tax for export licenses at everything!
It is going to generate revenue from corporate taxes that you only want to pass. You should thank him all day, every day for this brilliant move that you could never pull!
In the future, do not call it tax, you call it a supply to America. ANTENNA!
This publication of the social media comes as a high praise to many, as Cubas was known and a public skeptic of Trump and the Cuban calls on the vast majority of his strongest opponents, congratulating the president on this unique trade agreement.
While companies often face import and export fees, taxes and invoices when they transfer products to the border, this type of collection is unique to these technology companies to have often better equipped to use their intangible assets, allowing them to participate in profit and stock deals. As Cubas exclaimed, the US government has long sought to tax many of these companies based on their income. However, this new export sales tax can revolutionize the nature and extent in which these companies pay the fair share of their money in the US
The consequences of the Nvidia and AMD trade agreement
While the agreement seems to be a great news for many key participants, NVIDIA and AMD shares have fought after the news, according to Tower. Part of the mixed reaction is that the 15% revenue collection for these chips is high and the tax impact will possibly fall to Chinese customers, which means they will pay significantly more for the same chips they bought earlier this year. In addition, as mentioned by CNNIt is not clear if China will even want these chips, as it is not as advanced as the technology that Nvidia and AMD produce today.
However, the wider consequences of this agreement are that it creates a framework for Trump administration (and possibly future administrations) to tax specific types of goods produced by US companies. Other electronic manufacturers, such as Apple and Microsoft, as well as non -electronic companies such as DowDupont and Amgen, exports of billions of dollars each year. Even weapons makers such as Lockheed Martin, Boeing, Raytheon Technologies and Northrop Grumman export significant amounts of weapons to allied countries. Like chips and semiconductors, the US government is closely monitoring and possibly restricting the types and amounts of weapons sold in each country. Thus, given the new framework provided by Nvidia, AMD and Trump’s administration, these defense manufacturers can potentially determine if and to what extent they can expand their foreign sales, while providing some increased economic benefits to the US government.
Before more companies can negotiate such an agreement, the Trump administration should defend the legality of NVIDIA and the AMD’s agreement, as legislators on both sides of the corridor to question whether this export tax can be allowed, according to Political. Despite some of the pessimism and the possibility of legal challenges, the deal reflects ingenuity and thought out of the box and, if it is a real win-win situation, many other companies will possibly proceed to achieve a similar agreement with Trump.
