2024-06-06 - tech

Breaking news! AMD's "China-exclusive" AI chip exports are blocked, and US offic

AMD Inc. faces export challenges for China-specific AI chips.

According to reports, AMD is on the verge of selling the MI300 series "China-specific" AI chips, known as MI309, to Chinese customers, aiming to comply with the new export control regulations set by the U.S. government. AMD had hoped to gain approval from the U.S. Department of Commerce for this product; however, the U.S. government currently disagrees with the export of this special chip to China.

The report cites informed sources stating that, as part of the technology crackdown, U.S. officials have told AMD that the performance of the MI309 AI chip is still too powerful, exceeding the restrictions, and the company must obtain permission from the Bureau of Industry and Security (BIS) within the Department of Commerce to sell the chip.

As of now, AMD and the Department of Commerce have declined to comment. It is also unclear whether AMD is still applying for permission.

The 2022 U.S. ban prevented Nvidia and AMD from selling their most powerful AI chips to China, forcing them to seek solutions. Nvidia immediately responded with a modified model with reduced performance, while AMD has not publicly discussed its efforts to develop a new type of artificial intelligence processor for China.

AMD's foothold in China's AI chip industry is not as strong as Nvidia's, which held a significant market share before the ban. When these restrictions took effect in 2022, AMD stated that it did not expect to be significantly impacted by the rule. However, AMD is now more actively entering the AI chip market.

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In December, it launched the new MI300 series, which will challenge Nvidia's processors. Informed sources say that this product, tailored for China, is called MI309. It is currently unclear which Chinese customer is trying to purchase AMD's AI chips. If the chip manufacturer chooses to move forward, this factor may affect whether the company can obtain permission.

AMD's market value breaks through 300 billion.On February 29th, AMD's stock price surged by over 9%, allowing its market value to break the $300 billion mark for the first time, reaching $311 billion. In after-hours trading, AMD's shares further rose by 1.93%.

Concurrently, driven by AMD's stock surge, U.S. chip stocks rose in unison, with the PHLX Semiconductor Index closing up by 2.7%. NVIDIA "alternative stocks" performed exceptionally well, for instance, shares of Super Micro Computer, Inc. (SMCI) and Marvell Technology Group Ltd. (MRVL) both increased by 6.1%, while ARM's stock rose by 5.4%.

Earlier, Citigroup expressed that as AI technology continues to evolve and expand its applications, the demand for AI chips from various businesses and organizations is growing. Citigroup remains "extremely bullish on the semiconductor industry." Citigroup listed AMD, NVIDIA, and Broadcom Inc. as some of its favored stocks.

Furthermore, Dell Inc. made optimistic comments about GPU demand, and AMD's stock continued to rise in after-hours trading. Jeff Clarke, Dell's Chief Operating Officer, stated during an earnings call: "We are seeing strong interest and orders for AI servers equipped with next-generation AI GPUs from both AMD and NVIDIA, including NVIDIA H200 and AMD's MI300X."

AMD's Data Center GPU Business Achieves Robust Growth

AMD is seen as one of the main beneficiaries of artificial intelligence. Data shows that over the past few years, AMD's ranking in the S&P 500 Index has significantly increased, from 222nd five years ago, 114th four years ago, 58th one year ago, to the current 22nd position.

AMD announced its financial results for the fourth quarter and the year of 2023. The report shows that Q4 revenue was $6.168 billion, a year-over-year increase of 10%; the full-year revenue for 2023 was $22.68 billion, a year-over-year decrease of 4%.

Breaking it down by segment, the data center business segment's revenue reached $2.282 billion in the fourth quarter of 2023, a year-over-year increase of 38%. The main reason for the revenue growth in the data center business segment was AMD's increased shipments of fourth-generation EPYC processors for data centers and Instinct GPUs for AI and high-performance computing applications.

AMD CEO Lisa Su stated that due to the increased demand brought about by the AI boom, leading to the growth of the data center GPU business, AMD achieved impressive financial performance in Q4: "Thanks to the significant increase in sales of AMD Instinct GPUs and EPYC CPUs, as well as AMD Ryzen processors, the company achieved sequential and year-over-year growth in revenue and profit in 2023."

"Moreover, the demand for AMD's high-performance data center product portfolio continues to accelerate, and AMD is in a favorable position to leverage the development and application of artificial intelligence technology to drive the company's further growth."However, AMD's performance guidance fell short of expectations, leading to a 6% drop in its stock price in after-hours trading following the release of its financial report. AMD's guidance indicates that although the company's client platform and gaming hardware shipments are expected to decline, the stability of its data center business and the growth in AI and HPC GPU sales are expected to help maintain overall revenue levels, as AMD is gradually shifting towards market segments with greater growth potential.

In light of the supply shortage of NVIDIA AI GPUs, many people anticipated that AMD would face similar issues when launching its MI300 series AI GPUs. However, AMD stated that it would not be subject to supply constraints and is capable of meeting the market demand for the MI300 series AI GPUs. AMD anticipates selling AI GPUs worth $3.5 billion from the MI300 series by 2024.

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