AMD forecasts $1.5 billion revenue impact from U.S. curbs on China chip exports
The Hindu
AMD forecast it would suffer a $1.5 billion impact on its revenue this year due to new U.S. curbs on chips, which require it to obtain a license to ship advanced AI processors to China.
Advanced Micro Devices on Tuesday forecast it would suffer a $1.5 billion impact on its revenue this year due to new U.S. curbs on chips, which require it to obtain a license to ship advanced artificial-intelligence processors to China.
Shares of AMD were down about 1% in extended trading after initially rising 6% after the company released quarterly results. Due to an $800 million charge from new U.S. curbs on chip exports to China, AMD forecast adjusted gross margin of 43%, which represents an 11 percentage-point drop excluding the charge.
The charge will shave roughly 5% off the Wall Street forecast for revenue of $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 license to China for a chip tuned to comply with a raft of restrictions imposed by the U.S. Nvidia faces a $5.5 billion charge as a result, the company 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% of AMD's revenue.
Despite the challenges related to U.S.-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 U.S. tariffs.
On a conference call, AMD CEO 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."
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