Advanced Micro Devices (NASDAQ:AMD) shares climbed Monday after the chipmaker agreed to pay 15% of its China AI chip sales revenue to the U.S. government in exchange for export licenses for its MI308 processors.
The Trump administration imposed the condition amid security concerns over potential Chinese military applications. Nvidia (NASDAQ:NVDA) has agreed to similar terms for its H20 chips.
The deal comes as reports surfaced last week that President Donald Trump plans to impose roughly 100% tariffs on semiconductor makers not manufacturing in the U.S.
Also Read: AMD Stock Jumps After MI350 AI Chip Price Hike and Bullish Sales Forecast in Heated Race With Nvidia
The arrangement has sparked controversy, particularly among U.S. security experts who worry that the chips, particularly the H20, could be used by China’s military, thereby undermining U.S. strategic interests in artificial intelligence.
Liza Tobin, a former National Security Council official, stated, “Beijing must be gloating to see Washington turn export licenses into revenue streams,” the report said.
On Monday, Walter Bloomberg tweeted AMD’s confirmation on bagging AI chip export licenses.
China contributed 24.2% of AMD’s fiscal 2024 net sales, up from 15.1% in 2023. AMD’s latest quarterly results showed second-quarter revenue of $7.69 billion, up 32% year-over-year and above estimates, while adjusted EPS of 48 cents missed forecasts. Gross margin fell to 43% due to $800 million in U.S. export control charges.
CEO Lisa Su expects strong second-half 2025 growth fueled by the Instinct MI350 ramp and EPYC and Ryzen market share gains. The company guided third-quarter revenue to about $8.7 billion, plus or minus $300 million, topping analyst expectations. AMD shares are up 47% year-to-date, benefiting from surging AI chip demand.
Price Action: AMD stock is trading higher by 2.61% to $177.27 at last check Monday.
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