Undeterred by Trump's 15% Tax, Nvidia to Pay $700 Million Quarterly for China AI Chips as Stock Continues to Rise

Despite investor concerns over potential trade policy impacts and Beijing's encouragement for domestic firms to avoid Nvidia chips, investors remain optimistic about Nvidia's growth prospects in the AI infrastructure market.

Nvidia has agreed to pay a 15% sales tax on certain semiconductor products exported to China, amounting to approximately $700 million in export taxes per quarter. This U.S. government-imposed tax is a key condition allowing Nvidia to resume sales of its critical AI chip H20 to China.

In Q1, Nvidia's total sales in China reached about $5.5 billion (NT$165.2 billion), accounting for 13% of total revenue. About 80% of these chips, worth nearly $5 billion (NT$150.2 billion), are subject to the new tax.

Bloomberg estimates from this data that Nvidia may need to pay around $700 million per quarter to the U.S. Treasury. While substantial, this amount represents only a small portion of Nvidia's total revenue and profits.

Several factors contribute to investor optimism about Nvidia's outlook. First, the company dominates the data center GPU market with a 92% share and captures a significant portion of China's growing AI infrastructure spending.

Second, major tech firms like Microsoft, Alphabet (Google's parent), and Meta Platforms (Facebook's parent) have announced plans to increase capital expenditures by 2026, with a substantial portion allocated to deploying Nvidia GPUs in data centers.

A final positive factor is Nvidia's recent advancements in virtualization technology, such as the release of NVIDIA vGPU 19.0, which is expected to further contribute to its growth prospects.