AMD warns of $1.9 billion revenue hit from US curbs on China chip exports
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AMD forecast an adjusted gross margin of 43 per cent, which represents an 11 percentage-point drop excluding the charge.
PHOTO: REUTERS
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SAN FRANCISCO - Advanced Micro Devices (AMD) on May 6 forecast that it would suffer a US$1.5 billion (S$1.9 billion) impact on its revenue in 2025 due to new US curbs on chips, which require it to obtain a licence to ship advanced artificial intelligence processors to China.
Due to a US$800 million charge from new US curbs on chip exports to China, AMD forecast adjusted gross margin of 43 per cent, which represents an 11 percentage point drop excluding the charge.
The charge will shave roughly 5 per cent off the Wall Street forecast for revenue of US$31.03 billion, and most of the impact will be felt in the second half of the year.
Like AMD, Nvidia has also warned Wall Street that it will now need an export licence to China for a chip tuned to comply with a raft of restrictions imposed by the US.
Nvidia faces a US$5.5 billion charge as a result, it said in a securities filing. Nvidia has not yet disclosed what portion of its revenue the charge will impact.
China accounts for more than 24 per cent of AMD’s revenue.
Despite the challenges related to US-China trade tensions, AMD issued a second-quarter revenue forecast that topped Wall Street estimates.
The optimistic forecast could help reinforce investor confidence in the company’s ability to compete against Nvidia, though analysts said it partially reflected frenzied customer buying to gobble up inventory ahead of potential US tariffs.
On a conference call, AMD chief executive Lisa Su said the company had not seen a lot of “tariff-related activity” in the first quarter.
Synovus Trust portfolio manager Dan Morgan said: “There’s the potential that people could be buying ahead, anticipating that there could be additional tariffs going forward on PC chips.”
Demand for AMD’s advanced processors remains strong as these chips power complex AI systems for Microsoft, Meta Platforms and other customers, with cloud giants reinforcing their hefty spending plans for building AI infrastructure.
In February, the company steered away from a longstanding practice of giving a specific sales forecast for its AI chips, but Ms Su had said AMD expects “tens of billions” of dollars in sales “in the next couple of years”.
AMD reported data centre sales jumped 57 per cent to US$3.7 billion, which topped estimates of US$3.62 billion. The company includes much of its AI hardware in its data centre segment.
According to Mr Bob O’Donnell, chief analyst of Technalysis Research, AMD continues to gain share in AI data centre chips, including its central processing units, which do not receive as much attention as graphics processing units used for AI. REUTERS
