Latest news with #exportlicenses
Yahoo
4 hours ago
- Business
- Yahoo
Intel Jumps As CEO Plans Trump Meeting
Intel (NASDAQ:INTC) popped about 5% by midday after reports said CEO Lip-Bu Tan will meet President Donald Trump today, easing some nerves after Trump questioned his role over China ties. The visit is expected to cover Tan's background and Intel's path forward, and it set the tone for a busier day across semis. Warning! GuruFocus has detected 6 Warning Signs with INTC. AMD (NASDAQ:AMD) rose 2.6% and Nvidia (NASDAQ:NVDA) 0.6% after reports of a plan to share 15% of China AI chip revenue with the U.S. in exchange for export licenses, covering Nvidia's H20 and AMD's MI308. Marvell Technology (NASDAQ:MRVL) added 1.5% and Qualcomm (NASDAQ:QCOM) 1.2%. Arm (NASDAQ:ARM) climbed 3% after a Buy initiation at Seaport. Micron (NASDAQ:MU) gained 3% after lifting Q4 revenue guidance to 11.2Billion, plus or minus 100Million, from 10.7Billion, plus or minus 300Million, citing stronger DRAM pricing and execution. Equipment names inched higher too, with Lam Research (LRCX) up 1%, ASML (ASML) 0.8% and Applied Materials (NASDAQ:AMAT) 0.9%. AMAT reports Thursday, August 14. policy headlines and license terms can swing margins and sentiment, while better memory pricing supports the the TanTrump meeting for policy color and AMAT's results for the next read-through. This article first appeared on GuruFocus.
Yahoo
6 hours ago
- Business
- Yahoo
‘Bizarre' Nvidia, AMD chip export deal with Trump raises legal questions
Two major chipmakers in the U.S., Nvidia and AMD, have struck an unusual agreement with the federal government to share some of their revenue from chip sales to China — a deal that experts say raises constitutional questions and may set a concerning new precedent. The two firms have agreed to share 15 percent of the revenue generated from selling advanced artificial intelligence (AI) chips to China in order to secure export licenses after a months-long pause, a U.S. official confirmed to The Hill on Monday. 'It's bizarre in many respects and pretty troubling because Congress didn't have anything to say about this,' said Gary Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics. 'It's just the president's own negotiating with the individual companies,' he continued. 'That's not how historically we've done business in this country.' Under the agreement, Nvidia will share 15 percent of its revenue from H20 chip sales to China, while AMD will share the same portion of its MI308 chip sales. Both the Nvidia and AMD chips in question, which are graphics processing units (GPUs) designed for the Chinese market with U.S. export controls in mind, faced new restrictions from the Trump administration in April, effectively blocking sales to China. Last month, Nvidia and AMD said the U.S. government had assured them it would begin approving export licenses for the H20 and MI308 chips, although the Commerce Department reportedly did not start issuing licenses for several weeks. The new revenue-sharing agreement comes after Nvidia CEO Jensen Huang met with President Trump at the White House last week, according to Bloomberg. Huang has found himself in a tricky situation, balancing Washington and Beijing's interests as both countries vie for AI dominance. 'We follow rules the U.S. government sets for our participation in worldwide markets,' an Nvidia spokesperson said in a statement. 'While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide.' 'America cannot repeat 5G and lose telecommunication leadership,' they added. 'America's AI tech stack can be the world's standard if we race.' Nvidia dominates the market for GPUs, the chips powering the AI boom, fueling the company's rapid growth over the past few years. It became the first company in the world to reach a market capitalization of $4 trillion last month. AMD holds a much smaller share of the market, although it remains a key player. The agreement appears to remove a major impediment for both companies. Nvidia said earlier this year it incurred $4.5 billion in charges associated with the chip restrictions in the first quarter and expected an $8 billion sales hit in the second quarter. AMD forecast a $1.5 billion hit to revenue this year. The deal represents a notable shift in how the government approaches export controls. 'It's quite extraordinary because it turns the export control function of the government into a money-raising proposition, and that's never happened before,' Hufbauer said. The U.S. government is barred from imposing taxes on exports under both the Constitution and federal law. 'In addition to the policy problems with just charging Nvidia and AMD a 15% share of revenues to sell advanced chips in China, the US Constitution flatly forbids export taxes,' Peter Harrell, a nonresident fellow at the Carnegie Endowment for International Peace, wrote in a post on X. 'In addition to the Constitution, 50 USC 4815(c) expressly prohibits fees for export control licenses,' Harrell, who served as senior director of international economics in the Biden administration, added. It's unclear whether the 15 percent cut from Nvidia and AMD's revenues would count as an export tax because 'it looks like the companies just decided to make this payment in order to further their business,' Hufbauer noted. It's also not entirely clear who would have standing to challenge the move in court — an outcome Hufbauer suggested is ultimately unlikely. Even so, the agreements with Nvidia and AMD are likely to face pushback. The Trump administration's decision to allow Nvidia to resume H20 sales to China has already been a source of concern among both Democrats and Republicans, who have warned that it could boost Beijing's AI capabilities. Commerce Secretary Howard Lutnick has argued the administration is only giving China Nvidia's 'fourth best' chip. This represents an approach to export restrictions, largely supported by the semiconductor industry, that chipmakers should be allowed to sell some chips to China to prevent its national champion Huawei from gaining ground. However, the administration's latest move creates a new set of concerns. 'It raises concerns, certainly for many national security minded folks, of — are we now selling export control licenses? Is there a way that Nvidia will be able to buy licenses to sell more advanced chips than they're currently able to?' said Owen Tedford, a senior research analyst at Beacon Policy Advisors. Stacy Rasgon, a senior analyst at Bernstein Research, underscored that it makes sense for Nvidia and AMD to take a 15 percent cut because '85 percent is better than nothing.' However, he added, 'It feels like a little bit of a slippery slope. What's next? Where does it stop? Does it stop with China AI? Does it move to other China stuff that's under export control? In that case, sometimes there's a reason that there's export controls. Can you buy your way out of them? Strategically that's not great.' The deals could be a 'template' that other companies facing export controls try to follow, Tedford noted. 'It's somewhat unique in the way that they only would have happened with Trump as president,' he said. 'If we'd had a Biden or Harris administration and even if you'd had the same kind of on and off of these H20 chips, this really speaks to Trump's transactional nature, his desire to get some sort of win.' 'It raises questions about how — and I think this gets to some of more general concerns with the Trump administration — just policy feels like it's for sale in some ways, like policy outcomes,' Tedford added. 'If companies are big enough or strong enough, they can basically buy the policy that they want from the Trump administration.' Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
CNN
10 hours ago
- Business
- CNN
Trump ushers in an era of shakedown capitalism
Donald TrumpFacebookTweetLink Follow President Donald Trump has realigned global trade and American politics, ushering in a new era in which pay-to-play appears to be the new norm, and every interaction is a chance to score some extra cash — even if it means starting a global trade war or demanding a payout from America's own industries. ICYMI: American chipmakers Nvidia and AMD agreed to pay the US government 15% of their revenues from semiconductor sales to China in exchange for export licenses. It's an unorthodox (and potentially illegal) arrangement which, at minimum, offers Trump a new way to exert even more control over American business. The companies will now be able to resume selling chips in China, months after Trump blocked all semiconductor sales to the country, citing national security concerns. While that might not have sunk a company as large as Nvidia — which recently became the first public company ever to notch a $4 trillion valuation — it was still a hit to the bottom line. China made up 13% of Nvidia's sales in 2024, and the company forecast billions in lost revenue if the ban stayed in place. In exchange, they owe the government a cut of the proceeds. That's about $5 billion a year going into the Treasury coffers, for Trump to spend as he wishes, according to estimates by analyst Angelo Zino at investment firm CFRA. While the stock market's reaction to the news was muted, many investors spoke out against the deal. 'This federal shakedown of private companies is unconstitutional,' said Peter Schiff, chief economist at asset manager Europac, in a post on X. Mike O'Rourke, chief market strategist at JonesTrading, wrote in note to clients that it was 'sad that these two companies would acquiesce to such a deal,' and that 'they have exposed the rest of corporate America to the risk of needing to make deals with the government in order to transact business.' While there doesn't seem to be any historical precedent for this particular arrangement, it is consistent with the Trump playbook. The key is to leverage the power of the presidency to inflict just enough pain — or threaten to do so — that it forces everyone to the negotiating table. Trump has made an intentional strategy of manufacturing crises that he later claims credit for fixing. It's a 'set the neighborhood on fire then show up with a hose to help your neighbors, if they can pay you' approach to governing. And Trump is not hiding this shakedown tactic — he's bragging about it. When discussing the hundreds of billions of dollars in corporate pledges and investment commitments included in recent trade agreements, Trump sees those financial commitments as a way for countries to 'pay down' the threatened tariff rates, my colleague Phil Mattingly wrote last week. 'I got a signing bonus from Japan of $550 billion,' Trump told CNBC. 'That's our money. It's our money to invest, as we like.' Trump also uses tariffs as a cudgel to encourage companies to invest in domestic production. Apple, for one, managed to carve out an exemption from future semiconductor tariffs because it announced plans last week to invest $100 billion in the US over the next five years. While this particular pay-to-play setup may be new and uncomfortable for titans of industry more accustomed to the free market ethos of the past, they may have little choice but to engage. But more than that, part of the reason Trump may be so enamored with this heavy-handed capitalism is that it offers a novel (and again, not necessarily legal) way to centralize more power in the presidency. Congress has become a lot weaker than originally envisioned in the nearly two-and-a-half centuries since it was created, but one of its lasting powers has been the ability to tax, and the ability to spend. Let's talk about corporate taxes in general for a second and where that money has historically gone. Corporate tax rates have been a political rallying cry for decades on both sides of the aisle. Democrats wanted to raise them, saying that corporations with staggering profits were not paying their fair share. Republicans argued that without untaxed multitudes of income, companies would simply hire fewer people, or even lay off thousands. One part that both sides agreed on – or at least never seemed to publicly question – was that any taxes collected by the government would, like any other tax, be appropriated by Congress. But Trump has undermined the entire crux of the argument with a new third way. The Nvidia/AMD payouts are effectively a new form of corporate tax — one dictated to individual companies by the president, according to his singular whims, with proceeds directed to the Treasury, not to be appropriated by the legislature but to be spent as the president sees fit. And while it's a new way of doing things in the US, people in finance are using old terms to describe it. Trump and his advisers 'are learning that — as contrary as it may be to the free/efficient market capitalist ethos of the Republican party, it ticks so many other boxes that it is really irresistible to them: national security, revenue, reshoring, general industrial policy,' said Daniel Alpert, managing partner of Westwood Capital, in an email. 'This is a continuation of the state capitalist agenda that Trump… is clearly enamored with.'
Yahoo
20 hours ago
- Business
- Yahoo
Nvidia to Pay the U.S. Government 15% of China AI Chip Sales. How Will Its Revenue and Profits Be Impacted?
Key Points Nvidia and AMD have reportedly agreed to give the U.S. government 15% of their revenue from sales of their respective artificial intelligence (AI) data center chips designed for the China market in exchange for obtaining export licenses. This will be a very minor speed bump for Nvidia, whose revenue growth and profitability are phenomenal. 10 stocks we like better than Nvidia › Nvidia (NASDAQ: NVDA) and fellow graphics processing unit (GPU) maker Advanced Micro Devices, or AMD, have agreed to give the U.S. government 15% of their revenue from sales of their respective artificial intelligence (AI) data center chips designed for the China market in exchange for obtaining export licenses for these chips, according to the Financial Times, which first reported the story on Sunday night. The 15% AI chip revenue deal The U.S. Commerce Department began issuing export licenses for Nvidia's H20 chip and AMD's MI308 chip on Friday, the Financial Times (FT) reported on Friday. Nvidia provided a statement to the FT after it broke the government deal story on Sunday night that included the following: "We follow rules the U.S. government sets for our participation in worldwide markets." Background on Nvidia's H20 chip Nvidia had designed the H20 AI-enabling GPU specifically for the Chinese market after earlier U.S. export controls, enacted under the administration of President Joe Biden, meant it couldn't sell its more advanced data center AI chips to China. In mid-April, the Trump administration expanded the restrictions to include the H20. Nvidia immediately halted its sales and took a charge of $4.5 billion on its Q1 results for H20 inventory and purchase commitments. Then in mid-July, Nvidia emailed investors who subscribe to the company's news and said it was "filing applications to sell the Nvidia H20 GPU again. The U.S. government has assured Nvidia that licenses will be granted, and Nvidia hopes to start deliveries soon." At the time, there was no mention of giving the government a 15% cut of H20 revenue as a condition for obtaining export licenses. How will Nvidia's revenue be affected by this deal? We can get an estimate as to how this deal will affect Nvidia's financial results by looking at the company's fiscal first quarter, which ended on April 27. In that quarter, Nvidia sold $4.6 billion in H20 chips to China prior to the start of the export controls in mid-April. It said it was unable to ship $2.5 billion in H20 chips that it had already produced due to the export controls. So, had the restrictions not existed, Nvidia would have sold $7.1 billion in H20 chips to China customers in Q1. This amounts to 15.2% of $46.6 billion, which is what its total revenue would have been, absent the export controls. Over 15% of its total revenue is significant, so you can see the importance of Nvidia's China data center business. For its fiscal Q2 (which ended July 27), investors should expect Nvidia to report no sales of its H20 chip, because the export restrictions were in place the entire quarter. However, H20 sales should fully rebound in fiscal Q3 (late July to late October). When Nvidia provided Q2 guidance, it estimated that it would lose about $8 billion in H20 chip sales due to the export controls. So, keeping with roughly the same sequential quarter growth, let's assume Q3 H20 sales will be about $9 billion. In this case, Nvidia would pay the U.S. government $1.35 billion, which is 15% of $9 billion. While $1.35 billion seems like a huge number, it's only a small percentage of Nvidia's overall quarterly revenue. In Q1, Nvidia's total revenue was $44.1 billion -- and it would have been $46.6 billion, had it not "lost" sales of $2.5 billion due to the export restrictions. That $1.35 billion is only 2.9% of $46.6 billion. But the actual Q3 percentage will be smaller because Nvidia's revenue will be higher in Q3 than Q1. A revenue loss of somewhere between 2% to 3% of total sales is a very minor speed bump. Moreover, it's a much better situation than having no H20 sales. How will Nvidia's profitability be affected by this deal? Giving the government a 15% cut of H20 sales revenue should also negatively affect Nvidia's bottom line. But it should be an extremely minor dent, because Nvidia's data center platform is amazingly profitable. On that note, Nvidia overall is amazingly profitable. Nvidia doesn't break out its profitability by platform, so we'll have to use its overall numbers. In Q1, Nvidia's adjusted gross margin (gross profit divided by revenue) absent the $4.5 billion H20-related charge was 71.3%. The company provided its adjusted earnings per share (EPS) absent the charge, so I could calculate adjusted net income absent the charge and then from that calculate adjusted net profit margin (net income divided by revenue) absent the charge -- which would have been 56.1%. In other words, Nvidia converts more than half of its revenue into adjusted profits in a typical quarter, which is just phenomenal. It can easily absorb slightly less profitability on its H20 chips, which, again, account for roughly 15% of its total revenue in a typical quarter. In short, Nvidia stock's strong upward trajectory should not be hurt by the company having to give the government a slice of its H20 sales. Should you invest $1,000 in Nvidia right now? Before you buy stock in Nvidia, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,119,863!* Now, it's worth noting Stock Advisor's total average return is 1,060% — a market-crushing outperformance compared to 182% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of August 11, 2025 Beth McKenna has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool has a disclosure policy. Nvidia to Pay the U.S. Government 15% of China AI Chip Sales. How Will Its Revenue and Profits Be Impacted? was originally published by The Motley Fool Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
20 hours ago
- Business
- Yahoo
Nvidia to Pay the U.S. Government 15% of China AI Chip Sales. How Will Its Revenue and Profits Be Impacted?
Key Points Nvidia and AMD have reportedly agreed to give the U.S. government 15% of their revenue from sales of their respective artificial intelligence (AI) data center chips designed for the China market in exchange for obtaining export licenses. This will be a very minor speed bump for Nvidia, whose revenue growth and profitability are phenomenal. 10 stocks we like better than Nvidia › Nvidia (NASDAQ: NVDA) and fellow graphics processing unit (GPU) maker Advanced Micro Devices, or AMD, have agreed to give the U.S. government 15% of their revenue from sales of their respective artificial intelligence (AI) data center chips designed for the China market in exchange for obtaining export licenses for these chips, according to the Financial Times, which first reported the story on Sunday night. The 15% AI chip revenue deal The U.S. Commerce Department began issuing export licenses for Nvidia's H20 chip and AMD's MI308 chip on Friday, the Financial Times (FT) reported on Friday. Nvidia provided a statement to the FT after it broke the government deal story on Sunday night that included the following: "We follow rules the U.S. government sets for our participation in worldwide markets." Background on Nvidia's H20 chip Nvidia had designed the H20 AI-enabling GPU specifically for the Chinese market after earlier U.S. export controls, enacted under the administration of President Joe Biden, meant it couldn't sell its more advanced data center AI chips to China. In mid-April, the Trump administration expanded the restrictions to include the H20. Nvidia immediately halted its sales and took a charge of $4.5 billion on its Q1 results for H20 inventory and purchase commitments. Then in mid-July, Nvidia emailed investors who subscribe to the company's news and said it was "filing applications to sell the Nvidia H20 GPU again. The U.S. government has assured Nvidia that licenses will be granted, and Nvidia hopes to start deliveries soon." At the time, there was no mention of giving the government a 15% cut of H20 revenue as a condition for obtaining export licenses. How will Nvidia's revenue be affected by this deal? We can get an estimate as to how this deal will affect Nvidia's financial results by looking at the company's fiscal first quarter, which ended on April 27. In that quarter, Nvidia sold $4.6 billion in H20 chips to China prior to the start of the export controls in mid-April. It said it was unable to ship $2.5 billion in H20 chips that it had already produced due to the export controls. So, had the restrictions not existed, Nvidia would have sold $7.1 billion in H20 chips to China customers in Q1. This amounts to 15.2% of $46.6 billion, which is what its total revenue would have been, absent the export controls. Over 15% of its total revenue is significant, so you can see the importance of Nvidia's China data center business. For its fiscal Q2 (which ended July 27), investors should expect Nvidia to report no sales of its H20 chip, because the export restrictions were in place the entire quarter. However, H20 sales should fully rebound in fiscal Q3 (late July to late October). When Nvidia provided Q2 guidance, it estimated that it would lose about $8 billion in H20 chip sales due to the export controls. So, keeping with roughly the same sequential quarter growth, let's assume Q3 H20 sales will be about $9 billion. In this case, Nvidia would pay the U.S. government $1.35 billion, which is 15% of $9 billion. While $1.35 billion seems like a huge number, it's only a small percentage of Nvidia's overall quarterly revenue. In Q1, Nvidia's total revenue was $44.1 billion -- and it would have been $46.6 billion, had it not "lost" sales of $2.5 billion due to the export restrictions. That $1.35 billion is only 2.9% of $46.6 billion. But the actual Q3 percentage will be smaller because Nvidia's revenue will be higher in Q3 than Q1. A revenue loss of somewhere between 2% to 3% of total sales is a very minor speed bump. Moreover, it's a much better situation than having no H20 sales. How will Nvidia's profitability be affected by this deal? Giving the government a 15% cut of H20 sales revenue should also negatively affect Nvidia's bottom line. But it should be an extremely minor dent, because Nvidia's data center platform is amazingly profitable. On that note, Nvidia overall is amazingly profitable. Nvidia doesn't break out its profitability by platform, so we'll have to use its overall numbers. In Q1, Nvidia's adjusted gross margin (gross profit divided by revenue) absent the $4.5 billion H20-related charge was 71.3%. The company provided its adjusted earnings per share (EPS) absent the charge, so I could calculate adjusted net income absent the charge and then from that calculate adjusted net profit margin (net income divided by revenue) absent the charge -- which would have been 56.1%. In other words, Nvidia converts more than half of its revenue into adjusted profits in a typical quarter, which is just phenomenal. It can easily absorb slightly less profitability on its H20 chips, which, again, account for roughly 15% of its total revenue in a typical quarter. In short, Nvidia stock's strong upward trajectory should not be hurt by the company having to give the government a slice of its H20 sales. Should you invest $1,000 in Nvidia right now? Before you buy stock in Nvidia, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,119,863!* Now, it's worth noting Stock Advisor's total average return is 1,060% — a market-crushing outperformance compared to 182% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of August 11, 2025 Beth McKenna has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool has a disclosure policy. Nvidia to Pay the U.S. Government 15% of China AI Chip Sales. How Will Its Revenue and Profits Be Impacted? was originally published by The Motley Fool
