The Dow Jones (DJIA) opened in the green and is now trading slightly above negative territory as investors digest the implications of a new form of taxes on individual companies.
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Nvidia (NVDA) and Advanced Micro Devices (AMD) have agreed to send 15% of their China-related chip revenue to the U.S. government. In exchange, the two semiconductor companies will be granted export licenses to China.
The 15% tax will apply to Nvidia’s H20 chips and AMD’s MI308 chips, a U.S. official told the Financial Times. Both of these chips are specifically designed for the Chinese market.
Tax on Nvidia, AMD First of Its Kind
Receiving export licenses in exchange for paying a portion of sales to the U.S. government is “unprecedented,” with export control experts saying the deal is the first of its kind.
“What’s next — letting Lockheed Martin sell F-35s to China for a 15 per cent commission?” questioned Lisa Tobin, a member of the National Security Council during Trump’s first term.
The Commerce Department began issuing H20 export licenses to Nvidia on Friday, while AMD has also begun to receive export licenses for its MI308 chip.
The Dow Jones is up by 0.05% at the time of writing.
