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Shares of Advanced Micro Devices (NASDAQ:AMD) dropped more than 6% on Tuesday morning after the company said fresh U.S. export restrictions could seriously hit its business in China and other restricted markets.
The new rules target AMD's MI308 accelerator chips, which are now limited from being shipped to places like China, Hong Kong, Macau, and a group of countries under D:5 classification. AMD plans to apply for export licenses, but there's no promise those will come through.
If things don't go their way, the company estimates the fallout could cost up to $800 million. That includes losses from unsold inventory, purchase agreements, and other reserves it may need to set aside.
This all plays into the bigger picture of rising U.S.-China tensions and tighter controls over advanced tech. AMD also noted that these are just estimates for now, and a lot depends on how things play out with regulators down the line.
This article first appeared on GuruFocus.