AMD denies improperly sharing CPU tech with China

It allegedly used a complex system to bypass US rules.

AMD has been accused of feeding sensitive technology to China, and the company isn't having any of it. The chip designer has rejected Wall Street Journal claims that partnerships formed in early 2016 improperly shared x86 CPU tech with Sugon Information Industry, a supercomputer maker backed by the Chinese government. Sources talking to the WSJ alleged that AMD created a "complex structure" between two joint ventures to bypass American rules, with the Commerce and Defense Departments both raising concerns that the arrangement threatened national security. AMD, however, told a different story.

The company claimed that it "diligently and proactively" told the Commerce and Defense Departments (plus other agencies) about the Sugon deal, and that there were "no objections whatsoever" to either the joint ventures or the technology handover. AMD further argued that the report left out vital details, such as the "significant protections" put in place to prevent China from obtaining valuable tech. The WSJ report noted that AMD removed encryption from the hardware design it offered to China.

There's little doubt that AMD benefited from the partnerships. Licensing fees and royalties netted AMD about $293 million, while selling a majority stake in its China and Malaysia factories to a government-supported investment fund generated another $371 million. These were significant windfalls at a time when AMD was struggling to compete with Intel and NVIDIA -- now, it's putting pressure on both through its latest CPUs and GPUs.

To some extent, the accusations are coming too late regardless of their accuracy. The Commerce Department recently issued export restrictions that cut off Chinese supercomputer makers, including Sugon. AMD currently has no choice but to sever ties with Sugon, and there's no guarantee that it'll get even a partial reprieve like Huawei did. The US government is anxious about anything that might help China replicate US technology and nullify a competitive edge, and it's not willing to take chances no matter how careful companies like AMD might be.

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