Chip Giant AMD Warns: US Government's Export Restrictions on China Will Increase Additional Costs by $800 Million

According to an 8-K filing released by Nvidia on Tuesday, the US government has notified the company that it needs to obtain a license from the US government to sell cutting-edge chips to the Chinese market. This policy is expected to result in an additional $5.5 billion in related expense provisions for the company in Q1.

The Trump administration's arbitrary obstruction is not just a pain for Nvidia. Another semiconductor giant, AMD, also warned on Wednesday that due to the Trump administration's recent restrictions on the export of advanced processors to China, the company is expected to incur up to $800 million in expense provisions.

The additional $800 million in expenses is related to inventory, purchase commitments, and reserve provisions, consistent with those listed by Nvidia.

A spokesperson for the US Department of Commerce also confirmed late Tuesday that the White House will issue new chip export license requirements, including Nvidia's H20, AMD's MI308, and their counterparts.

China is AMD's second-largest market, contributing over $6.2 billion in sales last year, accounting for more than 24% of total sales. The new export restrictions have also put significant pressure on AMD's performance.

In addition, it is reported that Intel has also issued a notice that the sale of some of its advanced artificial intelligence processors to China will require approval from the US government, involving the Gaudi series products.

AMD stated that it will apply for an export license from the US government but cannot guarantee approval.

Affected by uncertainty, chip stocks fell across the board on the US stock market on Wednesday, with AMD and ASML down more than 7%, Nvidia down more than 6%, TSMC and Intel down more than 3%, and the Philadelphia Semiconductor Index down 4.1%.

A failed attempt that backfired.

The Trump administration's ever-changing trade policies are making the outlook for semiconductor giants, including Nvidia and AMD, more complex.

On Wednesday, chip equipment manufacturer ASML also warned that global chip demand is being affected by the US government's tariff policies. This could also artificially cool the AI boom.

Michael Ashley Schulman, Chief Investment Officer of Running Point Capital, stated that the US export restrictions on Nvidia's H20 chips underscore the increasing geopolitical uncertainty in the technology and semiconductor industries, especially during the Trump era. This unpredictability has also impacted businesses and investment markets.

Bernstein analyst Stacy Rasgon pointed out that this move was quite surprising to the market, as there were rumors last week that the Trump administration planned to lift chip export restrictions after Nvidia CEO Jensen Huang attended a dinner at Mar-a-Lago.

He also added that Nvidia's H20 sales in the Chinese market are about $12 billion, which is not particularly high overall and far below the related products of competitors in the Chinese market. Trump's ban essentially hands over the Chinese AI market to Huawei.