Markets are reeling today on the back of a slew of negative developments, including the ratcheting up of US import tariffs on China to an eye-watering 245 percent level, ASML's disappointing bookings disclosure in its latest quarterly earnings, and the $5.5 billion hit that NVIDIA expects to absorb in its ongoing fiscal Q1 2026 from the imposition of an "indefinite" export licensing requirement on the China-specific H20 GPU. Now, AMD has joined the growing chorus of US companies that are warning of financial hits from the spiraling US-China trade war.
To wit, after concluding an initial assessment of the new US export licensing requirements in relation to its China-specific MI308 GPUs, AMD now expects to incur around $800 million in charges related to inventory write-offs, purchase commitments, and related reserves.
According to AMD, the new chip-related export restrictions apply to "China (including Hong Kong and Macau) and D:5 countries, or to companies headquartered or with an ultimate parent in such countries."
Do note that AMD earned a net income of $1.6 billion in FY 2024. Accordingly, AMD's MI308 GPU-related charges amount to a whopping 50 percent of its total net income for the entirety of 2024.
For the benefit of those who might not be aware, the Trump administration introduced a series of de-escalatory measures recently in the face of a disorderly selloff in US Treasuries, including a concession to a global import tariff rate of 10 percent for all trading partners of the US barring China, and the temporary recission of tariffs imposed on the import of semiconductors and electronic items (including Apple's iPhones) from China. What's more, President Trump declared earlier this week that he is considering limited tariff exemptions for some auto companies to allow them space to move their supply chains out of Mexico and Canada. Do note that imports of vehicles and auto parts from ex-China countries currently remain subject to a 25 percent levy.
However, the Trump administration's largesse currently does not extend to China, which now faces a trade-demolishing tariff of 245 percent and much tighter export controls on AI-critical chips. As such, AMD and NVIDIA will likely not remain alone in quantifying the financial carnage that some of the biggest US companies now face in a rapidly spiraling trade war between the US and China.
