Nvidia and AMD had earlier agreed to remit 15 per cent of revenue from chip sales to China to the US government. swarajyamag.com/news
This is a brilliant move by Trump, to make a Chinese owned American company, Nvidia, to sell chips to China and without much effort, just a signature, he is going to make 25% of the earnings. Two Chinamen in a trade deal and the biggest winner is the white men approving the deal.
How much is Trump going to cream from this deal? Is it 25% of earning, ie profit, or 25% of revenue? The second sentence in the above quote, Nvidia and AMD, two Chinese American owned companies, already agreed to remit 15% of revenue to the US govt. The 25% that Trump is demanding cannot be less than the 15% of revenue being offered. So it is likely that the 25% is from the revenue. 25% of profit is very much lesser than of revenue. As an illustration, if the sale is US$100m, Trump would get US$25m. Oops, the US govt will get US$25m. The actual sale if it got through could be in the billions, hundreds of billions. If it is $100b, the US govt will get $25b. This is a lot of money for doing sweet nothing. And who is paying for it? China of course. Nvidia would do all the markups and China will do all the paying. Trump's 如义算盘。
Would Xi allow China to be fleeced with so much money? China is already self sufficient in high end chips, can do away with H200 chips. Why let the Americans squeezed so much money when China need not have to pay, making China looking like a sucker? And mind you, the issue of backdoor and spying software is still not resolved. Also, the sale of H200 will undermine China's quest to be self sufficient, will undermine Chinese own chip industries.
3 comments:
If Trump did not ask for the 25%, the price of the chips will be 25% cheaper, or a few billion savings for China. Trump is making China a sucker.
Trump thinks the Chinese are stupid enough to fall for his 'Trojan Horse' trick. Nvidia chips for China is going to unravel all the effort put in by China to be self-reliant. It is not going to work.
If China falls for tricks like this, it would not be around for five thousand years. It would have collapsed long ago. Do not try to teach China how to suck eggs.
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