AMD Faces $8B Loss, 3% Revenue Decline Due to U.S. AI Chip Restrictions

Advanced Micro Devices (AMD) has encountered significant hurdles due to U.S. export restrictions on artificial intelligence (AI) chips, resulting in an $8 billion impairment loss. This loss has dampened the company's future performance expectations. hsbc has responded by cutting its target price for amd from $90 to $70 and maintaining its "sell" rating. The primary reason for this downgrade is the restriction on AMD's access to the Chinese AI GPU market, which is expected to result in a 3% year-over-year decline in revenue for the second quarter.

HSBC's analyst, Frank Lee, pointed out that the restrictions on AMD's access to the Chinese AI GPU market are expected to result in a 3% year-over-year decline in revenue for the second quarter. This decline is a direct consequence of the U.S. government's export controls, which have limited AMD's ability to sell its products in China. The impact of the export restrictions is not limited to AMD. Other companies in the semiconductor industry are also feeling the pinch. The restrictions have led to a broader slowdown in the industry, as companies struggle to adapt to the new regulatory environment. This has resulted in a decrease in demand for semiconductors, which has had a ripple effect on the entire supply chain.

Ask Aime: "AMD's AI chip export woes affect stock price, HSBC cuts target from $90 to $70"

The export restrictions have also had a significant impact on the global semiconductor market. The U.S. government's actions have led to a shift in the dynamics of the market, as companies look for alternative suppliers and markets. This has resulted in a decrease in demand for U.S.-made semiconductors, as companies seek to diversify their supply chains. The export restrictions have also had a significant impact on the global economy. The semiconductor industry is a critical component of the global supply chain, and any disruption in the industry can have far-reaching consequences. The restrictions have led to a decrease in demand for semiconductors, which has had a ripple effect on the entire global economy.

In addition to the market access issues, AMD is facing challenges related to its advanced packaging capacity. The company's CoWoS wafer-level packaging capacity is expected to remain at 35,000 wafers per year by the end of 2025, with no year-over-year growth. This capacity constraint has raised concerns about the production timeline for the MI355 chip and the delivery of the MI400 rack server platform in the second half of the year. Furthermore, AMD's main competitors, Intel and NVIDIA, are also facing challenges due to export restrictions. Intel's aggressive pricing strategy for its CPU products could further squeeze AMD's market share and profit margins. NVIDIA's H20 chip exports have also been affected, with the company facing potential costs of $55 billion.

AMD is scheduled to release its first-quarter financial results after the market closes on May 6. The market currently expects the company to report revenue of $71.2 billion and adjusted earnings per share of $0.94. However, the focus has shifted to the April 15 announcement that the export of the MI308 chip to China has been temporarily halted. Although the company has made an $8 billion impairment provision and plans to apply for a license, HSBC believes the chances of approval are slim, and the impact on the company's full-year performance remains uncertain.