Advanced Micro Devices (AMD) has set a cautious revenue forecast for its China operations in the first quarter, projecting no more than $100 million from AI chip sales. This conservative outlook is primarily influenced by the unpredictable nature of U.S. export licensing for advanced artificial intelligence technologies, highlighting the ongoing geopolitical tensions affecting global tech markets.
During the company's fourth-quarter earnings call, AMD's Chief Executive, Lisa Su, clarified that while some MI308 chip sales occurred in the prior quarter and contributed to the current forecast, these were based on pre-approved licenses. She emphasized that these sales should not be interpreted as a sign of sustained momentum in the Chinese market given the fluid regulatory landscape. The company is actively seeking licenses for its MI325 chips, but the overall situation remains highly dynamic and uncertain.
The semiconductor industry, including major players like AMD, has been significantly impacted by stricter U.S. export controls on advanced AI chips. These regulations necessitate careful planning of product development and revenue projections for different regions, particularly China. AMD's strategy in China is a direct reflection of this broader regulatory caution, as companies navigate complex international trade policies.
Despite the challenges in the Chinese market, AMD reported strong overall financial results for the fourth quarter. The company's revenue reached $10.27 billion, surpassing analyst expectations of $9.67 billion. Adjusted earnings per share also exceeded estimates, coming in at $1.53 compared to the projected $1.32, according to Benzinga Pro. These figures demonstrate AMD's robust performance in other segments, even as its China AI chip sales face restrictions.
Following these announcements, AMD's stock experienced a decline in trading. Shares closed at $242.11, down 1.69%, and further dropped to $224.50 in pre-market trading, a decrease of 7.20%. While AMD generally exhibits a strong price trend across various timeframes, its value ranking is currently considered weak, as per Benzinga's Edge Stock Rankings.
AMD's decision to limit its China AI chip revenue forecast underscores the significant impact of U.S. export controls on the global semiconductor industry. The company's leadership is navigating a complex regulatory environment, emphasizing prudence in its projections for a key market while continuing to demonstrate strong financial performance in other areas. This situation highlights the delicate balance between market opportunity and geopolitical realities that technology companies must contend with today.