Wall St set for muted open as chip stocks dip on China sales deal
Semiconductor giant Nvidia (NVDA.O), opens new tab slipped 0.4% in premarket trading, while Advanced Micro Devices (AMD.O), opens new tab lost 1.2%.
A U.S. official told Reuters the companies had agreed to give the United States government 15% of revenue from sales of their advanced computer chips to China, days after the Commerce Department began issuing licenses for the sale of Nvidia's H20 chips.
Enabling semiconductor sales to China was an integral issue in the agreement Washington signed with Beijing earlier this year and markets will be keen to know if the latest development will impact the relationship between the world's two largest economies. The deal expires on Tuesday.
"It's a good way for the United States government to increase its cash and income... but a lot of people are going to argue that this is the wrong way to go," said Robert Pavlik, senior portfolio manager at Dakota Wealth.
"The Chinese government will probably use it as a point to argue that they need different chips because these particular chips might be susceptible to be reviewed by the Americans."
Markets also sought clarity on the sector tariffs U.S. President Donald Trump has announced.
At 08:48 a.m. ET, Dow E-minis were up 64 points, or 0.14%, S&P 500 E-minis were up 4.75 points, or 0.07%, and Nasdaq 100 E-minis were up 8.5 points, or 0.04%.
Traders took a step back after last week's rally helped the S&P 500 (.SPX), opens new tab and the Nasdaq (.IXIC), opens new tab log their strongest weekly performance in more than a month.
Investors expect that the recent shake-up at the U.S. Federal Reserve and signs of labor market weakness could nudge the central bank into adopting a dovish monetary policy stance later this year, fueling much of the optimism.
July's consumer inflation report is due on Tuesday and investors currently anticipate that the Fed will lower borrowing costs by about 60 basis points by December, according to data compiled by LSEG.
A better-than-feared earnings season brought some relief and BofA's monthly fund manager survey showed that owning megacap stocks was again the most popular trade.
Apple (AAPL.O), opens new tab was a standout last week following its biggest weekly showing in five years after the iPhone maker unveiled a series of U.S. investment pledges. The company's shares were down 0.5% on Monday.
In earnings, Micron (MU.O), opens new tab raised its forecast for fourth-quarter revenue and adjusted profit, reflecting strong demand for artificial intelligence and sending shares of the chip company up 5.1%.
U.S.-listed shares of lithium producers rose. Albemarle (ALB.N), opens new tab and Lithium Americas gained more than 10% each after Chinese battery giant Contemporary Amperex Technology (CATL) (300750.SZ), opens new tab halted output at a major mine, raising hopes that it would erode the oversupply in a market grappling with soft demand.
Intel (INTC.O), opens new tab was up 2.7% after a report said CEO Lip-Bu Tan was expected to visit the White House. Trump had called for his removal last week.
Trump is expected to meet Russia's President Vladimir Putin on Friday to try and negotiate an end to the war on Ukraine.
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The Independent
21 minutes ago
- The Independent
Chip makers Nvidia and AMD agree to pay 15 percent of Chinese revenue to America in deal to make Trump happy
Two American makers of artificial intelligence chips have agreed to pay the U.S. government 15 percent of sales on the technology, in an arrangement that one former export official called "unprecedented and dangerous." Tech giants Nvidia and AMD have agreed to the highly unusual terms as part of the requirements for obtaining export licenses to China, according to The Financial Times, which first reported the deal. President Donald Trump's administration had halted the sale of advanced computer chips to China back in in April, but Nvidia and AMD revealed in July that Washington would allow them to resume sales of the H20 and MI308 chips, which are used in artificial intelligence development. "We follow rules the U.S. government sets for our participation in worldwide markets. While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide,' a Nvidia spokesperson told The Independent Monday. 'America cannot repeat 5G and lose telecommunication leadership. America's AI tech stack can be the world's standard if we race." The Independent has sought comment from AMD on its arrangement with the Trump administration. Restrictions on sales of advanced chips to China have been central to the AI race between the world's two largest economic powers, but such controls are also controversial. Proponents argue that these restrictions are necessary to slow China down enough to allow U.S. companies to keep their lead. Meanwhile, opponents say the export controls have loopholes — and could still spur innovation. The emergence of China's DeepSeek AI chatbot in January particularly renewed concerns over how China might use advanced chips to help develop its own AI capabilities. The U.S. Commerce Department has begun issuing licenses for the sale of H20 artificial intelligence chips to China, citing an administration official, Reuters reported. Christopher Padilla, a top export control official in the Bush administration and a senior adviser with the Brunswick Group consulting firm, told the Washington Post that the deal was 'unprecedented and dangerous.' 'Export controls are in place to protect national security, not raise revenue for the government,' Padilla said. 'This arrangement seems like bribery or blackmail, or both.'' Alasdair Phillips-Robins, who served as an adviser at the Commerce Department during former President Joe Biden's administration, also 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 told Reuters. President Trump has been increasingly intervening in corporate America, particularly when it comes to tech giants. Last week he demanded new Intel CEO Lip-Bu Tan resign, calling him "highly conflicted" due to his ties to Chinese firms. Tan wrote to Intel employees Thursday that the company is working with the White House to make sure 'they have the facts.' Tan is set to meet with the president Monday. Trump has also pushed other American tech giants, including Apple, to relocate manufacturing locations to American soil.
BreakingNews.ie
an hour ago
- BreakingNews.ie
Nvidia and AMD agree to share China chip sale revenues with US government
Nvidia and AMD agreed to share 15% of their revenues from chip sales to China with the US government, a government official has confirmed. President Donald Trump's administration halted the sale of advanced computer chips to China back in April over national security concerns, but Nvidia and AMD revealed in July that Washington would allow them to resume sales of the H20 and MI308 chips, which are used in artificial intelligence development. Advertisement The official, who insisted on anonymity to discuss a policy not yet formally announced, confirmed to the Associated Press the revenue sharing terms of the deal, and said the broad strokes of the initial report by The Financial Times were accurate. The FT reported that Nvidia and AMD agreed to the financial arrangement as a condition for obtaining export licence to resume sales to China. Nvidia did not comment about the specific details of the agreement or its quid pro quo nature, but said they would adhere to the export rules laid out by the administration. 'We follow rules the US government sets for our participation in worldwide markets. While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide,' Nvidia wrote in a statement to the AP. Advertisement 'America cannot repeat 5G and lose telecommunication leadership. America's AI tech stack can be the world's standard if we race.' AMD did not immediately reply to a request for comment. Visitors give commands to a robot at Nvidia's booth during the China international supply chain expo in Beijing (AP Photo/Mahesh Kumar A.) The top Democrat on a House panel focusing on competition with China raised concerns over the reported agreement, calling it 'a dangerous misuse of export controls that undermines our national security'. Representative Raja Krishnamoorthi, the ranking member of the House Select Committee on China, said he would seek answers about the legal basis for this arrangement and demand full transparency from the administration. Advertisement 'Our export control regime must be based on genuine security considerations, not creative taxation schemes disguised as national security policy,' he said. 'Chip export controls aren't bargaining chips, and they're not casino chips either. We shouldn't be gambling with our national security to raise revenue.' Back in July, Nvidia argued that tight export controls around their chip sales would cost the company an extra 5.5 billion US dollars (£4 billion). They have argued that such limits hinder US competition in a sector in one of the world's largest markets for technology, and have also warned that US export controls could end up pushing other countries toward China's AI technology. Advertisement Commerce Secretary Howard Lutnick told CNBC in July that the renewed sale of Nvidia's chips in China was linked to a trade agreement made between the two countries on rare earth magnets. Restrictions on sales of advanced chips to China have been central to the AI race between the world's two largest economic powers, but such controls are also controversial. Proponents argue that these restrictions are necessary to slow China down enough to allow US companies to keep their lead. Meanwhile, opponents say the export controls have loopholes – and could still spur innovation. Advertisement The emergence of China's DeepSeek AI chatbot in January particularly renewed concerns over how China might use advanced chips to help develop its own AI capabilities.
Reuters
an hour ago
- Reuters
Wall St mixed, chip majors wobble after China sales deal
Aug 11 (Reuters) - Wall Street's main indexes were choppy on Monday as investors prepared for a busy week and chip companies seesawed after agreeing to share a portion of revenue from China sales with the U.S. under a trade policy shift from the Trump administration. Nvidia (NVDA.O), opens new tab and Advanced Micro Devices (AMD.O), opens new tab reversed premarket losses and were last up 0.2% and 2.6%, respectively, in volatile trading. A U.S. official told Reuters the semiconductor majors had agreed to give the United States government 15% of revenue from sales of their advanced chips to China. Analysts said the levy could hit the chipmakers' margins and set a precedent for Washington to tax critical U.S. exports, potentially extending beyond semiconductors. "A lot of people are not sure what to make of that because this is the first time in history that it's ever happened where an administration wants a percentage of the profits from a publicly traded company," said Michael Matousek, head trader at U.S. Global Investors Inc. Enabling semiconductor sales to China was an integral issue in the agreement Washington and Beijing signed earlier this year, which expires on Tuesday. U.S. President Donald Trump lauded China's cooperation in talks at a White House news conference earlier on Monday. At 11:59 a.m. ET, the Dow Jones Industrial Average (.DJI), opens new tab fell 91.43 points, or 0.21%, to 44,084.19, the S&P 500 (.SPX), opens new tab gained 6.87 points, or 0.11%, to 6,396.39, and the Nasdaq Composite (.IXIC), opens new tab rose 60.17 points, or 0.28%, to 21,510.19. Six of the 11 major S&P 500 sectors slipped, while healthcare (.SPXHC), opens new tab gained 0.4%, recovering some of the 5% declines it had logged so far this year. Traders took a step back after last week's rally helped the S&P 500 (.SPX), opens new tab and the Nasdaq (.IXIC), opens new tab log their strongest weekly performance in more than a month. On Monday, the tech-heavy Nasdaq was on track for its third consecutive record closing high, if gains hold. Investors expect that the recent shakeup at the U.S. Federal Reserve and signs of labor market weakness could nudge the central bank into adopting a dovish monetary policy stance later this year, fueling much of the optimism. July's consumer inflation report is due on Tuesday and investors currently anticipate that the Fed will lower borrowing costs by about 60 basis points by December, according to data compiled by LSEG. Citigroup and UBS Global Research became the latest brokerages to raise their year-end targets for the benchmark S&P 500. Micron Technology (MU.O), opens new tab raised its forecast for fourth-quarter revenue and adjusted profit, sending its shares rising 3%. Intel (INTC.O), opens new tab was up 5.4% after a report said CEO Lip-Bu Tan was expected to visit the White House. Trump had called for his removal last week. TKO (TKO.N), opens new tab jumped 7.5% after Paramount (PSKY.O), opens new tab bought the rights from the live entertainment company to exclusively distribute UFC events for the next seven years in a deal valued at around $7.7 billion. Trump is expected to meet Russia's President Vladimir Putin on Friday to try and negotiate an end to the war on Ukraine. Declining issues outnumbered advancers by a 1-to-1 ratio on the NYSE. Advancing issues outnumbered decliners by a 1.05-to-1 ratio on the Nasdaq. The S&P 500 posted 13 new 52-week highs and 14 new lows, while the Nasdaq Composite recorded 60 new highs and 82 new lows.
