AMD braces for $1.5B hit from export controls, Oracle deal softens the blow

2025-05-07 general

Washington, Wednesday, 7 May 2025.
AMD projects a $1.5 billion revenue shortfall in 2025. This is due to US export controls impacting GPU and AI accelerator sales to China. The restrictions target China-spec MI308-series accelerators, requiring new licenses. AMD already anticipates an $800 million charge for related inventory. A multi-billion dollar contract with Oracle, deploying Instinct and Epyc processors, offers some relief. AMD is accelerating the launch of its MI355X AI accelerators to counter the losses. Despite the challenges, AMD maintains a positive outlook, expecting strong growth in its data center business.

Financial impact and market response

AMD’s projection of a $1.5 billion revenue reduction has raised concerns among investors [1][2]. This decrease is attributed to the US government’s export controls on GPUs and AI accelerators sales to China [1]. Jean Hu, AMD’s CFO, stated that this loss stems from the new export controls implemented in April [2]. These restrictions impact the sales of China-specific MI308-series accelerators, which now require licensing agreements [1]. The company anticipates approximately $800 million in charges for inventory and related reserves in the second quarter due to these controls [1].

oracle deal as a mitigating factor

A multi-billion dollar contract with Oracle is expected to partially offset the $1.5 billion revenue loss [1]. This deal involves deploying Instinct and Epyc processors, along with Pollara 400 smartNICs, in Oracle’s infrastructure [1]. Lisa Su, AMD’s CEO, believes that the strength of their product portfolio will counterbalance the headwinds caused by the regulatory environment [1]. AMD’s Q1 2025 earnings showed datacenter sales increased by 57% year-over-year, reaching $3.7 billion, indicating strong performance in this segment [1]. The Oracle contract should help maintain this momentum despite export limitations [1].

broader industry and geopolitical context

The US government’s export restrictions are part of a broader effort to limit China’s access to advanced semiconductor technology [2]. Nvidia also anticipates a $5.5 billion charge due to restrictions on H20 GPU sales to Chinese partners [1]. These actions reflect concerns about China’s growing capabilities in AI and its potential impact on US technological leadership [3][6]. Some US lawmakers are proposing measures to track AI chip locations after sale to prevent smuggling and ensure compliance with export controls [4][5][7]. This includes potential requirements for chip manufacturers to embed location-tracking technology [5][7].

analyst perspectives and strategic implications

Analysts suggest that excessively strict export controls could weaken the US’s leadership in AI [2]. The Information Technology and Innovation Foundation (ITIF) warns that limiting access to global markets could hinder US companies’ ability to compete [2]. Nvidia CEO Huang Renxun has cautioned that losing access to the Chinese AI chip market, potentially worth $50 billion in the next few years, would be a significant loss [2]. As a result, Nvidia is reportedly adjusting its AI chip designs to comply with US export regulations while still serving the Chinese market [2][8].

Bronnen

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