The largest US company by market cap, Nvidia has a “Revenue Sharing Agreement” with the US Gov't. It is reported the deal was cut directly between Huang and Trump. This has been characterized as an “unprecedented move” related to national security export controls, whereby Nvidia (and AMD) agreed to pay the U.S. government 15% of the revenue generated from the sale of certain AI chips (specifically, in this case, the H20 chip) to China. This has been characterized as not a traditional investment, but a “condition for receiving export licenses”. Certainly Nvidia obtaining Groq in the “creative” manner used isn't a traditional investment either.
Call it what you like, but in law any party (most significantly in this case the US Gov't) that stands to benefit from Nvidia sales - - and therefore, any negative action to the contrary, which would curtail or damage Nvidia's sales, which would then be perceived as damaging stockholder value, potentially exposing both to a lawsuit for damages ?
Therefore, could it be assumed that the US Gov't has put itself in an interesting position of being constrained from doing anything that might damage Nvidia's stock value, such as the DOJ filing an antitrust action or suit against Nvidia ?
Even the mere mention of an investigation could result in loss of value of Nvidia stock. It could be debated that the US Gov't entering into these kinds of deals potentially hamstrings enforcement efforts, which enforcement should take precedence over revenue.
Instead of “creative regulatory evasion”, perhaps the US Gov't is now in a position of “creative regulatory liability and entanglement.”
Already trade experts and legal analysts have raised concerns about the legality and potential constitutional issues, suggesting it could also be seen as an export tax, which is prohibited by the U.S. Constitution.
In general terms it is difficult to sue the US Gv't due to sovereign immunity, but investors in Fannie Mae and Freddie Mac won a significant legal victory when a federal jury awarded them $612.4 million in damages in August 2023, finding the Federal Housing Finance Agency (FHFA) improperly changed stock purchase agreements (the "Net Worth Sweep") in 2012, breaching good faith and destroying shareholder value by funneling profits to the Treasury instead of recovering shareholders.
delichon•2h ago