In the early days of the tech boom, ambitious young French entrepreneurs formed startups aimed at producing novel hardware and software products. When the time came for the first batch to sell to larger–non-French–firms, however, Paris revealed that not only did the government have the right of first refusal for any sale, it was exercising its right to forbid sale to anyone but itself. And it named prices,
This led to a mass emigration of French entrepreneurs to Silicon Valley.
NVDA has just learned that the gross margin on the sales of its AI chips to China has been arbitrarily reduced by the president from 80% to $70%. This is a special tax that applies only to NVDA, and maybe AMD. Better than not allowing sales at all, but still an arbitrary act, and a loss of $2 billion a year to NVDA.
What NVDA may be thinking:
–the difference between 1 and 2 is a lot smaller than between 0 and 1. That is, there’s no reason to think that this tax isn’t just the first step rather than the last
–in addition, the Trump US is a more dangerous place to live as it has been. Hard to know whether vaccine denial or ICE is the bigger threat
–over the next five years, NVDA would save maybe $15 billion by reincorporating in someplace like Canada
If it were me, I wouldn’t be leaving today. But I would be speeding up my contingency planning.