Advanced Micro Devices (NASDAQ: AMD) The stock experienced significant devaluation on Wednesday. The semiconductor firm’s share price concluded the day’s trading session with a decrease of 7.4%, against a backdrop of a 2.3% drop for the broader market index. S&P 500 and a 3.1% decrease for the Nasdaq Composite Earlier during the session, the stock had dropped by as much as 10.5%.
Yesterday, AMD announced that sales of its MI308X processor to China have been essentially prohibited, leading them to anticipate an $800 million writedown due to this change. Additionally, the company had some other discouraging information for shareholders.
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AMD encounters additional export limitations and the potential for increased expenses.
Because of new U.S. regulations, AMD must obtain an export license before selling its MI308X AI chip. AI The company has introduced the processor to the Chinese market. However, since obtaining an export license is improbable, they are effectively prevented from selling this processor to Chinese buyers and expect to incur an $800 million loss due to unsold stock.
Introducing an additional bearish factor, TSMC is expected to increase the cost of their 4nm chips by approximately 30% due to strong demand. Given that AMD depends on TSMC for manufacturing its chip designs, they might end up encountering considerably elevated expenses because of this adjustment.
Macroeconomic factors also put pressure on AMD's stock price today.
Yesterday evening, the Trump administration announced an increase in tariffs on Chinese products to 245%, up significantly from the earlier rate of 145%. As tensions in the ongoing trade conflict between the U.S. and China continue to rise, investors scaled back their holdings of semiconductor stocks during today’s trading session.
Traders also got some less than comforting commentary from Federal Reserve Chairman Jerome Powell today. Due to the potential that new tariffs could both weaken economic growth and accelerate inflation, Powell says that the Fed will be taking a wait-and-see approach to interest rate cuts.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices. The Motley Fool has a disclosure policy .
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