USA Taking 15% from AMD and NVIDIA Sales in China Chip Revenue - Page 1
Forum section: electronics / general

author: watchmaker
author_rank: Unknown
timestamp: August 12, 2025, 11:03:57 am
content: I am trying to understand the logic and ramifications. This is NOT a tax (which cannot be specific to individuals). It is a condition for doing business.The USA has no investment in these companies, such as the bond and stock purchases that helped establish the railroads and canals in the 19th century.What economic theory describes an arrangement where a government takes a percentage of private businesses with no investment and is not a sector wide tax?It does not seem consistent with capitalist based economic theories to me. And what is next for the electronic industry?

author: Ice-Tea
author_rank: Super Contributor
timestamp: August 12, 2025, 11:11:11 am
content: Quote from: watchmaker on August 12, 2025, 11:03:57 am

author: MK14
author_rank: Super Contributor
timestamp: August 12, 2025, 12:04:14 pm
content: (Subscribing without comment).

author: tom66
author_rank: Super Contributor
timestamp: August 12, 2025, 12:12:24 pm
content: How is this different to a tax on, say, oil companies? The UK for instance applied an additional tax on oil/gas suppliers during the high commodity price period as a result of the Russia/Ukraine war. This strikes me as a sector-specific tax, but targeting only these AI chips which are created for the Chinese market. I don't think it's illegal. Is it corrupt? Well, probably not, providing the funds go directly to the government coffers and not the POTUS. Is it anti-capitalist? No more so than any other taxation is.

author: SiliconWizard
author_rank: Super Contributor
timestamp: August 12, 2025, 01:36:13 pm
content: Well, "capitalist" is a bit of a vague concept here, but is it "anti-free market"? Certainly.Now free market is an illusion, I don't think it ever actually existed. Be it for taxes, tariffs, regulations (which can be used as barriers to entry rather than just public safety) or subsidies of all kinds, this is anything but a free market.

author: Stray Electron
author_rank: Super Contributor
timestamp: August 12, 2025, 01:50:22 pm
content: The OP says that it's not a tax but it looks like a tax, smells like a tax, walks like a tax and quacks like a tax; so what else would you call it? Import taxes and even taxing individuals and corporations in other countries is nothing new. But you can bet your bottom dollar that it will be the consumers that ultimately pay for the tax.But I think that Trump's main purpose here to try to force these specific companies to move most, if not all, of their production back to the US. Like it or not, IC production, especially production of very sophisticated ICs, is a strategic asset just like being able to produce advanced electronics and computers, make steel or to build ships or airplanes. Ford and the other US car companies were very hard hit by the lack of ICs during Covid and that clearly demonstrated the US's vulnerability to supply disruptions from foreign sources, even to accidental and relatively short term disruptions. Imagine if China was to declare a permanent embargo of ICs or other materials to the US such as the US embargoed Japan prior to WW-II. Trump is trying in every area to get the US away from the sole source dependence of foreign sources, particularly from some of some of the not so friendly countries or not too stable countries.

author: gerbay
author_rank: Regular Contributor
timestamp: August 12, 2025, 02:16:58 pm
content: In my country, car prices are three to four times the manufacturer's asking price. When you buy one car, you're essentially buying two or three more for the government. I think the whole world is getting ready to switch to these ridiculous models. It looks like climate and carbon taxes will be implemented very soon, anyway.

author: watchmaker
author_rank: Unknown
timestamp: August 12, 2025, 02:17:54 pm
content: If it WERE a tax, it would apply at least sector wide. The US Tax Code PROSCRIBES taxes targeted at individual entities.So it is not a tax. QED

author: Siwastaja
author_rank: Super Contributor
timestamp: August 12, 2025, 02:26:41 pm
content: Quote from: watchmaker on August 12, 2025, 02:17:54 pmYour definition of "tax" is quite unique.Wikipedia contributors, for example, have agreed on this:QuoteIndividual or legal entity. Nothing about sectors. Of course, Wikipedia is just one more opinion, but... I for example happen agree with it, not you. QED.You might want to elaborate on how exactly you think US tax code proscribes taxes targeted at individual entities, but then in the end it does not matter: laws can be subjected to interpretation, workarounds, or even completely changed; that people who have won the elections is doing exactly that is called "democracy".

author: watchmaker
author_rank: Unknown
timestamp: August 12, 2025, 02:37:58 pm
content: Quote from: Siwastaja on August 12, 2025, 02:26:41 pmWikipedia is irrelvant. The only controlling force is the US Tax Code. I have no idea how taxes work in other countries..What I do know is that this is not a tax and none in the US is calling it such. It is fully outside the bounds of US practice.While socialist efforts such as private/government projects are currently in vogue in the USA, and we have a history of direct govt investment in buisnesses (such as 19th Cent RRs and companies devoted to "black" projects"), I have never heard od the US Govt just taking a percentage of a business's revenue in the US.I can only think of similar actions having taken place in non free enterprise societes.

author: Siwastaja
author_rank: Super Contributor
timestamp: August 12, 2025, 02:40:01 pm
content: Quote from: watchmaker on August 12, 2025, 02:37:58 pmSo, for starters, cite it or STFU."Legislators can't do X because law says so!" folks are hilarious because:* In 99.99% of cases law actually does not say what they think it says - they have never read it;* They miss the fact legislator's literal job is to change laws to implement what they want implemented

author: watchmaker
author_rank: Unknown
timestamp: August 12, 2025, 02:50:00 pm
content: Quote from: Siwastaja on August 12, 2025, 02:40:01 pmTHAT is the refuge of the weak minded. Into the plonk bucket.

author: David Hess
author_rank: Super Contributor
timestamp: August 12, 2025, 03:41:51 pm
content: Quote from: Stray Electron on August 12, 2025, 01:50:22 pmI might call it a duty, also known as an export tariff.

author: Simmed
author_rank: Frequent Contributor
timestamp: August 12, 2025, 03:56:05 pm
content: Quote from: watchmaker on August 12, 2025, 11:03:57 amits so bizarrehttps://www.bbc.com/news/articles/cvgvvnx8y19oQuotei am thinking, what about intel ?https://www.kontronn.com/news/intel-continues-to-lose-ground-in-china/before amd caught up to intelthey did not ask intel for special "fees" did they ?isnt that interesting ?

author: Andree Henkel
author_rank: Regular Contributor
timestamp: August 12, 2025, 04:11:24 pm
content: ? because Intel is a lame duck in the field of advanced AI accelerator hardware ?scurry and away...

author: TimFox
author_rank: Super Contributor
timestamp: August 12, 2025, 04:20:21 pm
content: The US Constitution mentions export duties.Article 1, Section 9 includes "No Tax or Duty shall be laid on Articles exported from any State."which is in the middle of a section governing trade between the States in the Federal Union.Article 1, Section 8 includes the general function "The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States."A guide on export regulations from the Library of Congress:https://guides.loc.gov/united-states-trade-policy/effect/exports

author: David Hess
author_rank: Super Contributor
timestamp: August 12, 2025, 04:30:34 pm
content: Quote from: Simmed on August 12, 2025, 03:56:05 pm"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," he added.I wonder if they are relying on the exact wording of the US Constitution:No Tax or Duty shall be laid on Articles exported from any State.These chips are not produced inside any US State and so are not being exported from any US State.

author: watchmaker
author_rank: Unknown
timestamp: August 12, 2025, 04:52:48 pm
content: Quote from: David Hess on August 12, 2025, 04:30:34 pmDavid, we agree. The chips are made and sold outside the USA. This is why I am perplexed/concerned. AFAIK, there is no provision for such an action and certainly the US Congress was not involved.As far as I can speculate, this is another ad hoc act that relies on the fact that any complainant has to pay their own bills while the taxpayer pays for the US legal defense. Just like the University stuff which at least had the figleaf of the schools receiving funds from the US taxpayer.And I have heard no official give this action a name; not tarriff, not tax, not license fee; nothing.These chips are not produced inside any US State and so are not being exported from any US State.

author: David Hess
author_rank: Super Contributor
timestamp: August 13, 2025, 03:54:25 am
content: Quote from: watchmaker on August 12, 2025, 04:52:48 pmFrom the descriptions I have read, it seems like AMD and nVidia are agreeing to pay the fee in exchange for the export license that they need.The US has all kinds of agreements which control "export" of products from other counties, if the products were partially funded by the US. Export of semiconductor fabrication equipment from ASML to China is a prime example, and maybe that is the link since these chips are fabricated on ASML equipment.Eventually more details will be released.

author: Simmed
author_rank: Frequent Contributor
timestamp: August 13, 2025, 06:41:59 am
content: Quote from: Ice-Tea on August 12, 2025, 11:11:11 amhaha tim cook and his "gold gift"look ma ! no tarriffs !!that looks heavy ? 1kg ?

author: tszaboo
author_rank: Super Contributor
timestamp: August 13, 2025, 08:57:52 am
content: Quote from: watchmaker on August 12, 2025, 11:03:57 amSo the previous administration outright banned export of these chips to China.This one set an export duty on it.And you all are upset about what this administration did. OK.

author: jpanhalt
author_rank: Super Contributor
timestamp: August 13, 2025, 09:26:03 am
content: It's a license fee. Google AI (simple to do):QuoteOf course, there is "pushback," and courts will get involved. But there is precedent for specific taxes and license fees to support government functions. Physicians have long been charged a "tax" (fee added to license cost) to pay for Medicaid shortfalls in states. Medicare adds an income-related tax to its usual cost for what it determines to be high income individuals. It's called IRMAA, which is disguised as an additional premium. Since when have healthcare insurance premiums in the US been related to income, not actuarial data for health? The Feds also use license fees in many areas to support what is effectively general revenue costs but called something else. Export license fees in the US are well established, example ITAR fees.I don't know anything about those 2 chips but suspect the same export license fee would apply to any manufacturer who made similar chips.

author: watchmaker
author_rank: Unknown
timestamp: August 13, 2025, 10:55:12 am
content: I suppose there may be a case to be sanguine about this. And the current admin has certainly increased my assets (I am not a moralist when it comes to money). But I remain on guard and am not the only one.https://www.marketwatch.com/story/trumps-nvidia-deal-opens-a-pay-to-play-toll-road-to-do-business-in-america-investors-will-feel-every-bump-5601f2f7?(one example of many; I get virtually all my news from financial sources, which tend to be more fact based. Waiting to see how The Economist analyzes this.)This is something new and we (the world) have no idea where it leads. What it does mean is that the usual playbooks no longer apply; like the quaint idea of buying stocks based on fundamentals in an age of complex products and trading options now coupled with computer algorithms.

author: David Hess
author_rank: Super Contributor
timestamp: August 14, 2025, 03:33:12 am
content: Quote from: tszaboo on August 13, 2025, 08:57:52 amWhether it is a good idea is a different discussion for which we are not prepared.What would be an acceptable price to allow export of these chips? Is there one?

author: jpanhalt
author_rank: Super Contributor
timestamp: August 14, 2025, 05:04:05 am
content: Grok4Quote

author: watchmaker
author_rank: Unknown
timestamp: August 14, 2025, 09:49:07 pm
content: Here we go.https://www.reuters.com/world/china/us-weighs-taking-stake-intel-bloomberg-news-reports-2025-08-14/Still trying to figure from which economic theory this is derived.