AMD Warns: US Restrictions on Chip Exports to China Will Cost the Company $1.5 Billion This Year

On Tuesday Eastern Time, US chipmaker Advanced Micro Devices (AMD) announced strong financial results and an optimistic outlook, exciting Wall Street and causing its after-hours stock price to surge by over 7% at one point.

However, AMD executives later warned during the earnings call that US sales restrictions on China would reduce the company's revenue by US$1.5 billion this year, casting a shadow over the otherwise optimistic atmosphere and prompting a rapid pullback in its after-hours stock price. As of press time, the company's stock price had only risen by 1.7% after hours.

AMD Announces Strong Financial Results

The financial results showed that AMD's first-quarter revenue increased by 36% YoY to US$7.4 billion, exceeding analysts' average expectation of US$7.12 billion. After excluding certain items, earnings per share were 96¢.

In its earnings report, AMD forecasted that its revenue for the second quarter of this year would be approximately US$7.4 billion, better than analysts' average expectation of US$7.23 billion.

The report also showed that in the lucrative data center processor market, AMD continued to gain market share from Intel: AMD's data center segment revenue in the first quarter was US$3.7 billion, up 57% YoY, slightly exceeding analysts' average forecast of US$3.66 billion.

In addition, strong demand for chips for major PC components also benefited AMD, with the company's PC-related sales increasing by 28% to US$2.9 billion.

Overall,this was an outstanding earnings report in all aspects,which is why AMD's stock price surged by over 7% after hours. However, company executives later disclosed that US export restrictions on China had significantly impacted AMD's revenue outlook, causing the company's stock price to fall rapidly.

US Export Restrictions Hurt AMD's Revenue

In April this year, the US imposed a new round of export restrictions on chips such as Nvidia's H20 and AMD's MI308. AMD stated at the time that it would incur US$800 million in expenses due to new tariffs imposed by the US on chip exports to China. On Tuesday this week, the company forecasted an adjusted gross margin of 43% for the second quarter, down 11 percentage points from the gross margin after excluding these expenses.

AMD's Chief Financial Officer, Jean Hu, also stated during the earnings call that due to the new round of export restrictions in April, AMD's 2025 revenue was expected to decrease by US$1.5 billion.

AMD's Chief Executive Officer, Lisa Su, said that the majority of the impact from US export restrictions on chip exports to China would be felt in the second and third quarters of this year.

Su also stated that despite facing export restrictions, she still expected AI chip revenue from the company's data center business to achieve "strong double-digit" growth this year.

"This is undoubtedly a headwind, but considering all the other work we're doing, we believe it's well managed," she said.

Lisa Su Eases Market Concerns

Despite acknowledging the impact of export restrictions, Lisa Su still emphasized her optimism about the overall demand for AI infrastructure. She also reiterated her forecast that the upcoming new chip products would help boost sales in H2. This statement has, to some extent, eased market concerns.

Lisa Su said:

"We're excited about the entire AI business, and I think we'll continue to see its strength... I know there's some uncertainty because it's related to tariffs and other things, but from an infrastructure perspective, this is one of the areas where we continue to invest in AI infrastructure. Therefore, we expect strong growth in H2 this year."

As of Tuesday's close, AMD's stock price closed at $98.62, down 18% year-to-date.