Wolfe Research: 15% tariff on chip sales to China may benefit semiconductor companies, NVIDIA Corporation (NVDA.US) under pressure as compared to AMD (AMD.US) is questionable.

Wolfe Research senior analyst Chris Caso said that semiconductor companies are expected to benefit from the 15% export tax policy proposed by Trump. The U.S. Department of Commerce is finalizing the legal details of the proposed agreements between Trump and NVIDIA Corporation (NVDA.US) and AMD (AMD.US). The agreements state that these two companies will hand over 15% of their sales revenue from AI chips to China to the U.S. government in exchange for export permits, which may also be extended to other companies in the future. Despite this, the semiconductor ETF has hit a historical high, surpassing the $300 mark, with a gain of over 24% so far this year. Caso pointed out in an interview that due to differences in profit margins, this permit policy may be more beneficial for NVIDIA Corporation. He explained, "AMD has lower profit margins, so whether they can easily bear the cost pressure of this 15% is still unknown." NVIDIA Corporation's higher profit margins put it in a more advantageous position to handle the additional costs. Considering that the U.S. government is willing to allow chip sales through the imposition of tariffs, this analyst raised concerns about whether the related restrictions are truly based on national security considerations. Caso said, "The initial premise of restricting the sale of NVIDIA Corporation's H20 chips to China was that its performance limitations should be comparable to the technological level of Chinese domestic companies." Furthermore, Caso also emphasized the positive changes in the entire semiconductor industry, including signs that the long-term cyclical downturn trend is coming to an end. He said, "We are starting to see signs that the cyclical downturn is coming to an end." He specifically mentioned Texas Instruments Incorporated (TXN.US) and Micron Technology, Inc. (MU.US) as having good potential for future development, with Micron's HBM memory being seen as an "economical choice for retail investors participating in AI investments."