Forbes·2025-08-11 23:30Core Viewpoint - Nvidia and AMD have agreed to pay 15% of their revenues from chip sales to China, which is expected to generate approximately $3 billion in additional revenue for the U.S. government, marking a novel approach to revenue collection that resembles an export tax [2][5][9]. Group 1: Company Overview - Nvidia and AMD rank 31st and 167th on the Fortune 500 list, respectively, and are among the largest manufacturers of computer chips, which are increasingly valuable in various devices, including computers, smartphones, vehicles, and appliances [3]. - The proprietary technology developed by Nvidia and AMD has become a strategic asset, particularly in the context of the artificial intelligence boom that relies heavily on advanced processing chips [4]. Group 2: Export Trade Deal Details - The agreement allows Nvidia and AMD to sell their H20 and MI308 chips to China in exchange for specific export licenses, following a previous ban that cost Nvidia billions in lost revenue [5][9]. - This new revenue collection method is not classified as a traditional tax but functions similarly, potentially opening avenues for the U.S. government to collect revenue from other companies in the future [2][8]. Group 3: Market Implications - Following the announcement of the deal, stock prices for Nvidia and AMD faced challenges, partly due to the high 15% revenue collection rate, which may lead to increased costs for Chinese customers [9]. - The deal sets a precedent for the Trump administration to tax specific goods produced by U.S. companies, which could extend to other sectors, including electronics and defense manufacturing [10][11]. Group 4: Legal and Political Considerations - The legality of the export tax arrangement is under scrutiny, with bipartisan concerns regarding its implementation, indicating potential legal challenges ahead [11].