Nvidia and AMD have agreed to give the US government 15% of their revenue from chip sales in China. This decision is in exchange for obtaining export licences for these semiconductors.<\/p>\n
This agreement has been reported by several media outlets, including the Financial Times and CNBC. The news arrives amidst potential concerns about its effect on US equity index futures, which could see fluctuations.<\/p>\n
Both companies are key players in the semiconductor industry and face increasing regulatory oversight concerning their activities in China. The arrangement underscores the complexities involved in navigating international trade and compliance with governmental regulations.<\/p>\n
An agreement has been reached for Nvidia and AMD to provide the US government with 15% of their revenue from chip sales to China for export licenses. This development provides a new, calculable cost but also removes the significant uncertainty of a potential complete ban. The market now has a clear number to factor into valuations instead of just speculation.<\/p>\n
From our perspective, this 15% revenue cost will directly pressure profit margins from a critical market. We have seen how sensitive these stocks are to regulatory news, such as the sharp declines following the export control announcements back in late 2022. Traders expecting a similar negative reaction in the short term might consider buying put options on NVDA and AMD.<\/p>\n
On the other hand, the removal of ambiguity could be seen as a long-term positive, creating a stable, albeit more expensive, path to operate in China. This clarity might encourage institutional investors who had stayed away due to the regulatory risks. A strategy for those who believe the worst is priced in would be to purchase call options, anticipating a relief rally in the coming weeks.<\/p>\n
Given these opposing views, we anticipate a period of heightened volatility for both stocks. The Nasdaq Volatility Index (VXN), which tracks expected volatility for the Nasdaq 100, has already risen over 5% in early August 2025 in response to initial rumors of the deal. Traders who are certain a big price move is coming, but are unsure of the direction, could implement straddles to profit from this instability.<\/p>\n
China has consistently accounted for about 20% of data center revenue for these companies, so a 15% tax on that segment is a material hit to the bottom line. This will be a major point of discussion in the next quarterly earnings calls, which are scheduled for late October 2025. Derivative plays using option spreads that expire after those earnings reports could be a prudent way to trade the anticipated outcome.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Nvidia and AMD to give U.S. 15% of China chip sales revenue for export license approvals.<\/p>\n","protected":false},"author":62,"featured_media":16994,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-28687","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/28687","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=28687"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/28687\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16994"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=28687"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=28687"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=28687"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}