AMD’s shares dropped by 2.8% before the market opened on March 5th, 2024. This was in response to a decision by US regulators to prevent the sale of AMD’s powerful AI chip in China.
AMD wanted approval from the US Commerce Department to sell their AI processor to Chinese customers. However, US officials thought the chip was too strong and required AMD to get a special license from the Bureau of Industry and Security (BIS) before selling it.
The particular AI chip is made to meet US export rules, with lower performance than what AMD sells in other parts of the world. But the US government is concerned about China gaining a military advantage, leading to the need for tighter controls on exporting advanced technologies, especially semiconductors for AI.
The US has been actively limiting China’s access to advanced semiconductors and the tools for making these chips. This has resulted in stricter rules on exports. In 2022, President Biden’s administration implemented initial export controls, and later strengthened them in Oct-Nov 2022 to cover more technology and restrict sales to countries that might undermine the ban.
This setback for AMD follows a warning from Nvidia, a chip industry competitor, about potential issues with their products due to stricter US chip regulations. The actions of the US government are affecting not only AMD but also other companies in the industry.
To sum up, AMD is facing obstacles in selling its AI chip designed for the Chinese market because of US government restrictions on exports. This situation reflects the ongoing tensions between the US and China regarding advanced technology exports, impacting various companies in the industry.
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