Intel and Advanced Micro Devices could lose billions of dollars in income if China limits the use of their chips and servers in government systems.
Intel (INTC.O.) and Advanced Micro Devices (AMD.O.) might lose billions of dollars in revenue if China restricts the use of their chips and servers in government computers, according to numerous Wall Street analysts on Monday.
China has issued recommendations to phase out U.S. chips from firms as well as to replace Microsoft’s (MSFT.O) and foreign-made database software with indigenous ones.
Beijing has been attempting to lessen its reliance on foreign corporations by expanding its domestic semiconductor industry as it grapples with US export restrictions on technology, particularly cutting-edge processors.
The recent action could have a significant impact on chipmakers’ revenues since China was Intel’s largest market in 2023, accounting for 27% of revenue, while AMD derived approximately 15% of its sales from the nation.
Microsoft does not disclose its revenue from China.
“A total cessation of China’s governmental purchases of Intel and AMD CPUs might impact revenue by low single digits,” said Bernstein analyst Stacy Rasgon, anticipating a hit of up to $1.5 billion for Intel and a few hundred million dollars for AMD.
However, he stated that Intel’s profit might be damaged in the mid-single to low-double digits, “given higher exposure and the vagaries of a worse cost structure.”.
Intel and Microsoft shares sank 1.6% and 1%, respectively, in afternoon trading, while AMD reversed early losses to trade modestly higher.
China’s industry ministry published a statement in late December announcing three separate lists of central processing units, operating systems, and centralized databases deemed “safe and reliable” for three years after publication, all from Chinese enterprises.
Apple has also been caught up in escalating Sino-US tensions, with sources reporting in December that Chinese agencies and state-backed enterprises have instructed their employees not to bring iPhones to work.
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