Today the United States added five additional Chinese companies to the list of banned entities, these will join companies like Huawei that are cut off from access to American technology. In 2016 AMD (NASDAQ:AMD) joined together with the Chinese to form Tianjin Haiguang Advanced Technology Investment Co. Ltd. (THATIC) in a deal that saw its first generation Zen cores getting licensed for chip development.

China will lose access to modern x86 cores, but AMD is mostly done with THATIC already

As we discussed last week, China is sorely lacking in the department of producing modern microprocessors. Chinese companies have sought to catch up on both logic design and fabrication, and AMD's JV abbreviated as 'THATIC' helped out in the logic department. China was already restricted on any Government related firms purchasing Intel's Xeons, so THATIC was a way much-needed x86 chips could find their way into the country.

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AMD's owns a 51 percent stake in Haiguang Microelectronics Co. (HMC) which helps faciliate manufacturing the 14nm Zen-based products. The end result is an EPYC-clone called the Hygon Dhyana, which was actually recently spotted at CES, three years after the original joint venture was formed.

What we learned today was light on details, but we can surmise a few things. We are told that THATIC as a whole is being placed on the same banned list as Huawei, which we have covered extensively. The U.S. Department of Commerce cited one crucial element of the venture, its association with Sugon, which designs and sells supercomputing systems to many Chinese customers, including those affiliated or owned by government and military agencies.

The U.S. government said the concern is that the technology could find itself aiding the Chinese to run nuclear bomb simulations, among other military applications.

Dr. Lisa Su, CEO of Advanced Micro Devices did downplay the relevance of the partnership moving forward with comments she made at this years' Computex. According to Dr. Su, THATIC would not be receiving IP to manufacture AMD's upcoming line of Zen 2-based products. Beyond that, for existing technology, AMD has clarified in the past that the register transfer level (RTL), was not transferred as a part of the joint venture. In other words, HMC and Hygon don't have the blueprints to actually fabricate Zen cores. What Hygon is selling is basically a rebranded EPYC 7000 series processor, with additional logic blocks in place for customized cyber security measures no doubt requested by the Chinese government.

There isn't much they can do since either GlobalFoundries or TSMC (NYSE:TSM) were the ones actually fabricating the processors, so any concern over IP theft would be minimized here. How and when the actual ban will go into effect was left unsaid, so we can only assume that long term, the JV is dead in the water, but when Hygon Dhyana chip deliveries will be halted is anyone's guess.

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In terms of impact to AMD, the losses will be minimal. AMD did receive a cash infusion as a result of the deal in 2016, and is most likely receiving on-going royalties. However, the deal was never a major contributor for the company. With confirmation that AMD wasn't intending to supply THATIC with their newest generation of IP, we can assume the company didn't want to grow this area of its business.

Of course, despite a minimal impact, the news isn't positive for the company. AMD stock ended the day down over three percent to $29.10 which erased last week's gains.