Finally figured it out. The confusing part was that you can’t just ignore all the things from sensors output, as they are “subfeatures” and lm-sensors only supports ignoring “features”.
This /etc/sensors.d/dGPU.conf did the trick:
chip "amdgpu-pci-0300"
ignore in0
ignore temp1
ignore temp2
ignore temp3
ignore power1
ignore fan1
This will ignore all the sensor features of the dGPU and thus lm-sensors will no longer wake it up.
Next step is to make it dynamic on dGPUs suspend state.
Note: My dGPU is at PCI address 03:00.0 . You may have to check your address with lspci | grep 7700
03:00.0 VGA compatible controller: Advanced Micro Devices, Inc. [AMD/ATI] Navi 33 [Radeon RX 7700S/7600/7600S/7600M XT/PRO W7600] (rev c1)