U.S. Restrictions Hit China Sales
Advanced Micro Devices (AMD) anticipates a $1.5 billion revenue loss in 2025. This decline stems from recent U.S. regulations that restrict certain AI chip exports to China. Implemented in April, these rules mandate that companies obtain a license to ship high-end processors. U.S. officials are concerned these chips might aid China in creating advanced AI systems that could threaten national security. Advanced Micro Devices (AMD) anticipates a $1.5 billion revenue loss in 2025. This decline stems from recent U.S. regulations that restrict certain AI chip exports to China. Implemented in April, these rules mandate that companies obtain a license to ship high-end processors. U.S. officials are concerned these chips might aid China in creating advanced AI systems that could threaten national security.
Positive Signs Despite the Setback
Even with the challenges due to the AMD China chip export ban, AMD’s outlook for the second quarter remains strong. The company expects revenue of about $7.4 billion, beating analyst estimates of $7.25 billion. Analysts say many customers are buying chips early to avoid delays caused by the new rules.
CEO Remains Confident
AMD CEO Lisa Su addressed the situation in a recent earnings call.
“It’s a headwind, but one we think is manageable,” she said.
She expects the biggest impact to hit in the second and third quarters of the year. Despite this, Su predicts strong double-digit growth in AI chip sales from AMD’s data center business.
Financial Impact from Tariffs
In addition to the lost revenue because of the AMD China chip export ban, AMD also faces an $800 million charge due to tariffs. The company cut its gross margin forecast to 43%, down 11 percentage points from earlier estimates.
China makes up about 25% of AMD’s total revenue. The export rules will reduce AMD’s projected 2025 revenue by around 5%, dropping it from $31.03 billion.
CFO Explains the Numbers
CFO Jean Hu confirmed that the revenue loss stems from the April export controls. She also noted a spike in early chip orders from major cloud providers. These companies want to avoid getting caught in the export license process.
Michael Schulman from Running Point Capital said:
“Big cloud companies are rushing to buy chips now. But once their storage fills up, Q3 sales might drop fast.”
Strong Demand for AI Chips
Despite these hurdles, AMD continues to see strong demand for its chips. Companies like Microsoft and Meta are spending heavily on AI infrastructure. AMD’s data center sales rose 57% to $3.7 billion, beating the expected $3.62 billion.
AMD Outperforms Rivals
AMD’s revenue surged 36% year over year, reaching $7.44 billion, while its adjusted earnings per share came in at 96 cents, exceeding estimates by two cents.
Meanwhile, rivals like Marvell Technology and Super Micro had a tougher time. Marvell delayed its investor event, citing economic uncertainty. Super Micro lowered its 2025 revenue forecast, raising doubts about its position in the AI market.
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