Alibaba Group Holding is reportedly considering purchasing up to 50,000 of Advanced Micro Devices Inc. (AMD) artificial intelligence (AI) chips, marking a significant development for U.S. chipmakers seeking to maintain market share in China amid evolving trade restrictions. The potential deal comes shortly after AMD CEO Lisa Su's visit to Beijing last week.
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The Chinese tech giant could order between 40,000 and 50,000 of AMD's MI308 AI accelerators, trade publication MLex on Tuesday cited people familiar with the matter. The MI308 is a China-compliant version designed specifically for the Chinese market and has received U.S. export approval, though AMD must pay a 15% licensing fee to U.S. authorities.
The potential order follows President Trump's approval of limited GPU sales to China earlier this month, allowing companies including Nvidia Corp., Intel Corp., and AMD to resume exports under new trade conditions. Trump indicated that the same approach applied to Nvidia's H200 chips would extend to AMD and other American chipmakers.
If completed, the deal would provide AMD with a major foothold in the Chinese AI market as competition intensifies with Nvidia. Analysts at Raymond James project potential revenue upside of $500 million to $800 million for AMD from China sales, contributing as much as 20 cents per share to adjusted earnings.
AMD CEO Commits to Further Investments
Su met with China's Commerce Minister Wang Wentao on December 18 and Industry and Information Technology (MIIT) Minister Li Lecheng on December 17 during her visit to Beijing. The MIIT statement said Su affirmed AMD's "commitment to deepening its investments" in China and "strengthening cooperation to jointly promote industrial innovation and development."
Li noted that China would offer "greater cooperation opportunities to foreign enterprises including AMD" and expressed hope the company would continue deepening its engagement in the Chinese market. The meetings involved exchanges on "strengthening cooperation in the digital economy and artificial intelligence sectors," according to MIIT.
Su also visited the headquarters of Chinese computer maker Lenovo on December 16, where she was shown the company's latest products and technologies, including humanoid robotics work. During her previous China trip in March, Lenovo introduced a server for large-model training powered by AMD chips.
China Remains Critical Market
China, including Hong Kong, generated $6.2 billion in revenue for AMD in 2024, representing about 24% of the company's total and making it the chipmaker's second-largest market behind the U.S., according to AMD's financial reports.
However, the market has become more challenging for U.S. semiconductor suppliers. Reuters reported in November that Beijing issued guidance barring the use of foreign AI chips—including those from AMD, Nvidia, and Intel—in datacenters funded even partly by the state.
The MI308 chip is equipped with 192GB of HBM3 memory and can run long-context inference for 70-billion-parameter large language models on a single card. It is priced at around $12,000, roughly 15% cheaper than Nvidia's H20, and has not faced the same security scrutiny as other chips.
Competition with Nvidia Intensifies
The potential AMD deal comes as Nvidia was reported earlier this week that it plans to ship as many as 80,000 H200 chips to China by mid-February ahead of the Chinese New Year. Raymond James analysts project potential revenue upside of $7 billion to $12.5 billion for Nvidia from China sales, with an adjusted earnings boost of as much as 30 cents per share.
AMD's China-compliant AI accelerator chips are close to commercial rollout, positioning the company to compete directly with Nvidia in the world's second-largest economy. The analysts noted that "several moving pieces remain, making it difficult to assess the exact outcome" as regulatory risks persist.
"Questions remain regarding whether the Chinese government will allow or discourage its cloud operators from purchasing advanced GPUs, as well as how the U.S. government's export license fee will be accounted for," the Raymond James analysts wrote. They maintain a Strong Buy rating on Nvidia, viewing "AI infrastructure as a multi-trillion-dollar opportunity over the next decade."
AMD shares were nearly flat on Tuesday despite the reports, while Nvidia stock rose 3%. Neither AMD nor Alibaba immediately responded to requests for comment.
