Advanced Micro Devices (AMD) is facing a potential headwind as China plans to replace foreign chips from its telecom systems by 2027. This move, mandated by the Ministry of Industry and Information Technology, primarily affects Intel and AMD and mirrors the US’s actions against Huawei and restrictions on chip exports to China. China’s strategy to develop its own processors, as exemplified by Huawei’s release of a phone featuring a domestically made 5G chip by SMIC, raises questions about the performance of these chips compared to Nvidia, Intel, and AMD.
Despite this, analysts believe that AMD is still a buy. The company’s introduction of new processors for AI-enabled PCs, which will power PCs from HP and Lenovo starting Q2 2024, is seen as a direct challenge to Nvidia and Intel in this growing market. AMD’s partnership with Taiwan Semiconductor Manufacturing Company (TSMC) gives it access to advanced nanometer technology, which is crucial for producing high-performance chips.
AMD’s unveiling of the Ryzen 8000G series desktop processors, built on a 4-nanometer process, showcases its commitment to delivering high gaming and content creation performance. The company and its rival Intel have emphasized the rise of AI PCs, anticipating increased adoption after the launch of ChatGPT in November 2022. AMD’s Ryzen AI integration in select models and AMD PRO technologies provide enhanced AI processing power and enterprise-grade manageability for business users.
AMD’s recent launch of new additions to its commercial mobile and desktop AI PC range further strengthens its position in this market. The Ryzen™ PRO 8040 Series is designed for business laptops and mobile workstations, while the Ryzen PRO 8000 Series desktop processor is tailored for business users, promising top-notch performance with minimal power consumption.
While the competition with Nvidia remains intense, AMD’s focus on specific applications and cost-effectiveness, coupled with its expansion into the AI PC market, makes it a compelling investment. Despite China’s plan to replace foreign chips, AMD’s strategic moves position it well for continued growth and success.
