The semiconductor chip manufacturing company AMD has announced that there is a high chance of an estimated $1.5 billion revenue decline in 2025 after the US restricted the export of advanced AI chips to China. This initiative by the US aims to halt Chinese advancements in the AI domain for national security purposes.  In March, the US Commerce Department imposed export restrictions on approximately 80 Chinese-based companies, which led to a sudden drop in stock shares of US chip manufacturing companies. 

Revenue Decline Expected in Q2 and Q3

Chinese AI and IT companies hold a major customer base for AMD, contributing around a quarter of the company’s overall sales revenue. After this export restriction, the company expects nearly 5% shaved off the stocks forecast for revenue of $31.03 billion per LSEG data. Lisa Su, AMD’s CEO, expressed in a conference that most of the revenue drop is expected to be visible in the second and third quarters. However, she seems optimistic about the growth of the company due to the AI boom in the US. She remarked

“It’s certainly a headwind, but one which we think is well contained given everything else that we have going on”

A Temporary Sale Boost 

Analysts also anticipate a temporary surge in AMD’s sales as Chinese companies accelerate their chip purchases ahead of the new regulations taking effect and the chances of more restrictions in the ongoing US-China trade war scenario. On this, Michael Schulman, chief investment officer at Running Point Capital, opined 

“The subtext is hard to miss; big hyperscalers would rather accelerate purchase order dates than risk export‑license roulette once the latest China rules bite,” 

Strategic Market Leverage for AMD 

Amid these speculations about the revenue drop in 2025, the leverage point for AMD is the demand for AMD’s advanced chips by domestic AI companies like Microsoft and Meta Platforms. The growing demand for semiconductor chips by  AI data centres may give tens of billions of dollars in sales to the company. However, with this demand surge, the competition for AMD will also accelerate as Intel and Nvidia are also boosting their sale in the US market.