Wolfe Research: A 15% sales entry tax on chips to China may benefit semiconductors, NVIDIA withstands pressure while AMD is in doubt
Wolfe Research senior analyst Chris Caso stated that semiconductor companies may benefit from the 15% export tax policy proposed by Trump, especially NVIDIA, which can better withstand cost pressures due to its higher profit margins. The U.S. Department of Commerce is finalizing agreements with NVIDIA and AMD, requiring both companies to remit 15% of their AI chip sales revenue to China to the U.S. government. Nevertheless, semiconductor ETFs have reached an all-time high, with an increase of over 24%. Caso questioned the national security considerations of the policy and pointed out that the industry's cyclical downturn may be coming to an end
According to the Zhitong Finance APP, Chris Caso, a senior analyst at Wolfe Research, stated that semiconductor companies are expected to benefit from the 15% export tax policy proposed by Trump.
The U.S. Department of Commerce is refining the legal details of the proposed agreement between Trump and NVIDIA (NVDA.US) and AMD (AMD.US), which stipulates that these two companies will pay 15% of their AI chip sales revenue to the U.S. government in exchange for export licenses, and this may also extend to other companies in the future.
Nevertheless, the semiconductor ETF has still reached an all-time high, breaking through the $300 mark, with an increase of over 24% this year.
In an interview, Caso pointed out that due to differences in profit margins, this licensing policy may be more favorable for NVIDIA. He explained, "AMD has lower profit margins, so whether it can bear the 15% cost pressure as easily as NVIDIA is still uncertain." NVIDIA's higher profit margins put it in a more advantageous position to cope with additional costs.
Considering the U.S. government's willingness to allow chip sales through tariffs, the analyst questioned whether the related restrictions are truly based on national security concerns. Caso stated, "The initial premise for restricting NVIDIA's H20 chips sold to China was that their performance limitations should be comparable to the technological level of domestic Chinese companies."
Additionally, Caso emphasized the positive changes occurring in the entire semiconductor industry, including signs that the long-term cyclical downturn may be coming to an end.
He said, "We are beginning to see some signs that the cyclical downturn is about to end." He specifically mentioned Texas Instruments (TXN.US) and Micron Technology (MU.US) as having good development potential in the future, with Micron's HBM memory being regarded as "an economical choice for ordinary people to participate in AI investment."
