diff --git a/clang/lib/Basic/Targets/AMDGPU.cpp b/clang/lib/Basic/Targets/AMDGPU.cpp
--- a/clang/lib/Basic/Targets/AMDGPU.cpp
+++ b/clang/lib/Basic/Targets/AMDGPU.cpp
@@ -245,6 +245,7 @@
   MaxAtomicPromoteWidth = MaxAtomicInlineWidth = 64;
   CUMode = !(GPUFeatures & llvm::AMDGPU::FEATURE_WGP);
   ReadOnlyFeatures.insert("image-insts");
+  HalfArgsAndReturns = true;
 }
 
 void AMDGPUTargetInfo::adjust(DiagnosticsEngine &Diags, LangOptions &Opts) {
diff --git a/clang/test/SemaCUDA/fp16-arg-return.cu b/clang/test/SemaCUDA/fp16-arg-return.cu
new file mode 100644
--- /dev/null
+++ b/clang/test/SemaCUDA/fp16-arg-return.cu
@@ -0,0 +1,7 @@
+// RUN: %clang_cc1 -emit-llvm -o - -triple amdgcn-amd-amdhsa -fcuda-is-device -fsyntax-only -verify %s
+
+// expected-no-diagnostics
+
+__fp16 testFP16AsArgAndReturn(__fp16 x) {
+  return x;
+}