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AMD Faces Regulatory Hurdle for China-Tailored Chip, Requires Export License


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Regulatory Obstacle for American Semiconductor Company

Advanced Micro Devices (AMD), an American semiconductor company, has encountered a regulatory obstacle in the United States for its China-tailored artificial intelligence (AI) chip, according to a report on Tuesday. The chip, designed by AMD to have reduced performance compared to its premium products to comply with U.S. export restrictions, did not receive clearance from the Commerce Department for sale in China due to its perceived advancement.

As a result, AMD will need to secure an export license from the Department’s Bureau of Industry and Security to proceed with the sale of the chip in China. However, it remains uncertain whether the company will pursue the license, as neither AMD nor the Commerce Department’s Bureau of Industry and Security has provided immediate comments in response to CNBC’s inquiries.

The backdrop of this regulatory setback is the U.S. government’s efforts to limit China’s access to advanced semiconductor technologies over national security concerns. Despite these restrictions, American companies have continued to supply less advanced technologies to the Chinese market without licenses.

AMD’s products, including AI development and training chips, have raised concerns among U.S. officials regarding potential military applications by Beijing. This regulatory challenge faced by AMD echoes similar struggles encountered by other leading semiconductor companies, such as Nvidia, in navigating U.S. export controls for chip sales to China.

Nvidia, a key player in the AI chip market, has also grappled with export restrictions and has adjusted its product offerings to comply with U.S. regulations. However, these efforts have faced setbacks, leading to declines in revenue from regions targeted by export controls, including China.

While AMD had a smaller presence in the Chinese AI chip market before the trade restrictions, the company has recently intensified its focus on this sector. AMD’s new MI300 product line aims to challenge Nvidia’s dominance in GPU products, signaling its ambition to capture a larger share of the AI chip market.

Despite challenges posed by export restrictions, both Nvidia and AMD have witnessed significant growth in their stock prices amid the AI boom. Nvidia’s shares surged over 250% in the past year, while AMD saw a remarkable increase of over 150%. However, the regulatory hurdles underscore the complexities and uncertainties faced by semiconductor companies operating in the global market.