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(Bloomberg) -- Advanced Micro Devices Inc., Nvidia Corp.’s closest rival in artificial intelligence processors, said that US restrictions on sales to China will cost $1.5 billion in revenue this year, a warning that clouded an otherwise upbeat outlook.
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The guidance stems from an export restriction imposed in April that targeted AMD’s MI308 chips, the company said during an earnings call on Tuesday. Data center revenue will decline in the current period, hurt by a $700 million reduction in sales of that product, AMD predicted.
Chief Executive Officer Lisa Su remains bullish about overall demand for AI infrastructure. She also reiterated her projection that new chips debuting soon will help boost sales in the second half of the year. But she’s facing investor concerns about trade restrictions and tariffs, as well as the challenges of competing with larger rival Nvidia Corp. in the AI chip market.
AMD shares, which had risen more than 7% following an upbeat quarterly report, declined after the company disclosed the China sales impact. The stock began to recover after Su argued her case on a conference call with analysts.
“We’re excited about the overall AI business — I think we continue to see strength there,” she said. “I know there are some uncertainties as it relates to tariffs and other things, but this is one of those areas where from an infrastructure standpoint, there continues to be investment in AI infrastructure. And so with that, we would expect strong growth into the second half of the year.”
AMD had said last month that it expected to record an expense of about $800 million because of the new export rules.
Shares of the chipmaker closed earlier at $98.62 on Tuesday, leaving it down 18% this year.
Second-quarter sales are forecast to be about $7.4 billion, the company said. That compares with an average analyst estimate of $7.23 billion.
AMD continues to make gains in the lucrative market for data center processors, taking share from Intel Corp. It’s also benefiting from strong demand for chips that are the main component in personal computers.
AMD’s first-quarter sales rose 36% to $7.4 billion, topping the $7.12 billion estimate. Profit was 96 cents a share, minus certain items.
Revenue in the data center division was $3.7 billion in the period, a gain of 57% from the same period a year earlier. On average, analysts had predicted $3.66 billion. Personal computer-related sales climbed 28% to $2.9 billion.