How Investors React When American Tech Companies Move Abroad

Published on December 23, 2019

A technology company currently based in Delaware in the U.S. is moving to Switzerland due to concerns that they will not be able to easily work with companies globally at their current location.

RISC-V is a “collaborative community of software and hardware innovators,” according to its website.

The concerns that the U.S. is not a good place to start an open and collaborative technology company is what pushed the decision and what chose the new location.

Hatched on the grounds of the University of California, Berkeley, the company now has members from all over the world. This foundation’s location in the U.S. has caused some concerns for members, especially from China.

Recently, trade with China has become strained after President Trump issued an executive order to put pressure on China to —????

The company is based on research that started in a lab at the university and at one point received funding from the Pentagon’s Defense Advanced Research Projects Agency or DARPA.

Related: U.S. Department of Defense Awards Microsoft $10B ‘JEDI’ Contract for Cloud Services

RISC-V’s move to Switzerland is to be to quell the fears of members, according to a Reuters article. Members of the company include Google, Samsung, Huami, Boston University, and the Alibaba Group.

Additionally, its new “chip technology” aims to provide universality for the tech space. They want to create a standard that everyone has access to streamline the process much the same way that standard

But Why Leave the U.S.?

They are moving due to concerns that some of their members may be more comfortable with the company operating outside of the U.S.

This decision to move to a country that had more of an open or neutral stance on trade was first made public in December of 2018. Switzerland was not chosen until later.

Switzerland has free trade agreements with 40 countries and is working to negotiate more.

Switzerland also has bilateral trade agreements with China and other countries including the EEA, Japan, and the Faroe Islands.

RISC-V’s CEO Calista Redmond said in an interview with Reuters that the decision was not because of anyone event but just due to a general consensus that members might be made more comfortable by moving the company outside of the U.S.

Tariffs, Taxing and International Relations

U.S. relations with several countries have been strained this year after leaders have imposed tariffs.

The trade war started in July of 2018 after Trump started implementing tariffs on technology resources and other goods from China.

These tariffs are set to take effect in 2020 and for products used in the making of electronics, tariffs are set to increase the cost for both U.S. producers and consumers.

These tariffs are estimated to cost each U.S. household about $831 per year.

They have also strained relationships between the U.S. government and the Chinese government as the higher prices imposed by the tariffs could mean buyers in the U.S. begin to look elsewhere for their raw materials.

In the beginning of December, President Trump started negotiations for a trade deal with China after over a year of strained trade relations.

The two countries have gone back and forth imposing new tariffs and creating instability in many different industries as people are either laid off or profit margins fluctuate unpredictably.

If the new trade deal goes through with China, the uncertainty could be over. The deal is set to ensure that for China, the tariffs will be reduced, and for the U.S., that China will agree to buy $50 billion of U.S. farm goods.

But China isn’t the only country the U.S. has given or received tariffs from. After France looked to tax profits generated in France by technology companies, Trump announced his intentions to put a substantial tariff on all French goods imported into the U.S.

The tax applies to all technology companies and is three percent of all revenue from in France. The majority of affected companies are from the U.S.

The French President Emmanuel Macron is not backing down but suggested that the two leaders talk about the tax.

He said that imposing a lofty tariff on France in response was unacceptable and that the European Union would not tolerate it but did suggest that they could reach an agreement that suited them both. Trump agreed to talk about a compromise.

Moving…But At What Cost?

The tech company moving has not come without opinions. Republican lawmakers are concerned that the U.S. will no longer have a say in the technology.

“If American public funds were used to develop the technology, it’s also completely outrageous [to move],” Republican Senator Tom Cotton told Reuters.

Because of the funding from DARPA, lawmakers including Cotton and Representative Mike Gallagher argue that moving the country to Switzerland shouldn’t take place.

They think that if it has received funding from the government and a start in the U.S. that the company should stay on American soil.

RISC-V’s CEO said that the move was to ensure equal access to all countries and that the U.S. would have the same access as any other country.

RISC-V’s exact move date has not been published.

Sarah Smith is a Staff Writer at Grit Daily. Based in Tampa, Florida, she primarily covers new tech and events.

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