- Chip giant AMD denied a Wall Street Journal report that it sidestepped US trade restrictions vs China.
- The report said an AMD venture gave China access to state-of-the-art chips.
- Some analysts said they were not convinced AMD did anything wrong.
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Advanced Micro Devices on Friday denied that the chip giant broke US laws after a news report said an AMD joint venture gave China access to state-of-the-art processors.
The AMD partnership with a military contractor is helping China compete with the US in building the next generation supercomputer with AMD’s chip technology, according to a Thursday report in the Wall Street Journal.
The report said China paid AMD nearly $300 million in licensing fees, plus royalties from the joint venture. The Pentagon tried to stop the Santa Clara, California-based tech company from forming the partnership due to national security concerns, the report said.
The news report and AMD’s strong denial comes in a time of rising trade tensions between the US and China, highlighted by the Trump Administration’s ban on tech giant Huawei.
Attempt to sidestep rules
In seeking to form its China venture, AMD did not submit its proposal for approval by the Committee on Foreign Investments, an interagency body led by the US Treasury Department, the report said. Current and former national-security officials believe AMD came up with a "complex structure" for the deal, "which involved the creation of two interlinked joint ventures" in order to "sidestep U.S. regulations," according to the report.
AMD rejects suggestions that it broke US regulations or tried to deceive the US government.
"AMD takes strong exception to characterization in the story that it did not act properly or transparently in creating the joint ventures," Harry Wolin, AMD’s general counsel, said in a statement.
Strong AMD denial
Wolin said that AMD "diligently and proactively briefed the Department of Defense, the Department of Commerce and multiple other agencies within the US government before entering into the joint ventures. AMD received no objections whatsoever from any agency to the formation of the joint ventures or to the transfer of technology."
The technology involved in the venture, he added, "was of lower performance than other commercially available processors."
IDC President Crawford Del Prete told Business Insider that the controversy "shines a light" on the way supply chains and product development efforts in the global tech market has become "very complicated and intertwined."
Analyst Tim Bajarin of Creative Strategies Inc. said he was familiar with the AMD’s efforts to set up the joint venture in China, and he’s not convinced the company did anything wrong.
"They were very upfront with US Government officials and took extra care to follow US guidelines on what could or not be included in the way of technologies from the US that could be imported to China as part of this program," he told Business Insider. "AMD’s comments reflect what I have known about this venture from the beginning."
Another analyst, Patrick Moorhead of Moor Insights and Strategy, a former AMD corporate vice president, also said he was not inclined to believe the report’s portrayal of the chip giant.
"Having known AMD for nearly 30 years as a customer, executive and analyst, I find it highly improbable the company knowingly did anything wrong," he told Business Insider. "The company’s legal and government relations groups are conservative and low-risk to a fault."
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