Why Is AMD Stock Trading Lower Tuesday

The U.S. Department of Commerce has applied export restrictions on high-powered AI processors. AMD, seeking to cater to its Chinese clientele, proposed a chip compliant with U.S. export standards, featuring lower capabilities than those available internationally.

However, U.S. authorities deemed the chip excessively advanced, mandating a Bureau of Industry and Security license for its distribution.

The U.S. continues to tighten controls over China’s procurement of cutting-edge semiconductors and chipmaking equipment, motivated by concerns over potential military enhancements.

The Biden administration escalated these measures in 2022 and expanded them in October 2023 to encompass additional technologies and regulate transactions with intermediary countries.

AMD has a commanding position in the semiconductor industry with its control over the x86 chip standard. However, its influence faces a challenge from China’s strategic shift to the open-source RISC-V architecture.

China’s adoption of RISC-V, particularly for cloud computing and intelligent vehicles, signals its ambition to bypass U.S. sanctions and lessen its reliance on Western chip technologies, such as AMD’s x86.

Analysts recognize AMD as a leading beneficiary in AI technology, second only to Nvidia.