Nvidia and AMD to pay 15% of China chip sale revenues to US government, FT reports
1. AMD agreed to pay 15% of China chip sales to the U.S. government. 2. This deal is part of obtaining export licenses for semiconductors.
FAQ
Why Bearish?
The revenue-sharing agreement may increase operational costs and reduce profit margins for AMD. Historically, such arrangements have pressured companies’ stock prices due to lower earnings outlooks.
How important is it?
The revenue-sharing agreement will directly affect AMD's profitability and market competitiveness in China, indicating a significant impact factor for its investors.
Why Short Term?
Costs will be immediate, impacting quarterly earnings soon after the agreement. Comparatively, other companies under similar agreements faced immediate pressures on their stock performance.