AMD Agrees to 15% Revenue Cut for China AI Chip Sales Amid US Export License Controversy

AMD shares rose 2.61% to $177.27 after the company agreed to pay 15% of its China AI chip sales revenue to the US government in exchange for export licenses for its MI308 processors. The deal comes amid concerns over potential Chinese military applications. CEO Lisa Su expects strong second-half 2025 growth fueled by the Instinct MI350 ramp and EPYC and Ryzen market share gains. AMD stock is up 47% year-to-date, benefiting from surging AI chip demand.

Advanced Micro Devices (AMD) stock rose by 2.61% to $177.27 on Monday following the company's agreement to pay 15% of its China AI chip sales revenue to the U.S. government in exchange for export licenses for its MI308 processors. This deal comes amid ongoing concerns over potential Chinese military applications of advanced AI chips [2].

The revenue-sharing arrangement has sparked controversy among U.S. security experts, who worry that the chips could be used by China's military, potentially undermining U.S. strategic interests in artificial intelligence [2]. However, the Trump administration sees this as a strategic move to maintain market share for American firms in China's lucrative technology sector while keeping a close eye on national security thresholds [1].

AMD's CEO, Lisa Su, expects strong second-half 2025 growth fueled by the Instinct MI350 ramp and EPYC and Ryzen market share gains. The company's latest quarterly results showed second-quarter revenue of $7.69 billion, up 32% year-over-year and above estimates, while adjusted EPS of 48 cents missed forecasts. Gross margin fell to 43% due to $800 million in U.S. export control charges [2].

AMD shares are up 47% year-to-date, benefiting from surging AI chip demand. The company anticipates third-quarter revenue of about $8.7 billion, give or take $300 million, excluding any sales from shipments of its MI308 AI chip to China, as export licenses are still pending [3].

In mid-July, the administration quietly reversed the prohibition on specially tailored, “China-compliant” chips. Nvidia filed applications to resume H20 GPU sales, and AMD plans to seek licences for its MI308 accelerators, but approvals are still pending [3]. AMD's market capitalization now exceeds Intel's by about $200 billion, and the company remains the second-largest producer of graphics chips, the foundation for data-center AI accelerators [3].

AMD's CEO, Lisa Su, emphasized the need to balance export controls for national security with the wider adoption of U.S. technology. She stated, “There should be a balance between export controls for national security as well as ensuring that we get the widest possible adoption of our technology” [3].

References
[1] https://www.wionews.com/business-economy/nvidia-amd-to-pay-us-15-of-china-ai-chip-sales-under-export-deal-1754892888446
[2] https://www.benzinga.com/markets/tech/25/08/47035987/amd-stock-rallies-after-us-clears-china-ai-chip-sales-with-15-cut-to-washington
[3] https://cryptorank.io/news/feed/53d4f-amd-shares-slip-despite-ai-driven-q3-revenue-outlook