Beijing’s Guidelines Threaten Billions in Sales for U.S. Semiconductor Companies
Shares of Intel (INTC) and Advanced Micro Devices (AMD) plummeted over 2% on Monday following reports of China’s plans to limit the use of their chips and servers in government computers. The Financial Times revealed China’s intentions to phase out U.S. chips, including Microsoft’s Windows and foreign-made database software, in favor of domestic alternatives, potentially posing a significant threat to American tech companies.
Amid escalating tensions with the U.S., China aims to bolster its local semiconductor industry to reduce dependence on foreign firms, particularly in light of U.S. export restrictions. The impact of these measures could be substantial, as China constituted a significant portion of Intel and AMD’s revenue in 2023, with 27% and 15%, respectively.
Analysts predict potential revenue hits of up to $1.5 billion for Intel and several hundred million dollars for AMD, with the former facing a higher impact on profit margins due to its greater exposure. Despite requests for comment, Intel, AMD, and Microsoft remained silent on the matter.
As China reinforces its push for self-reliance in critical technology sectors, the global tech landscape faces increasing uncertainty, with significant implications for market dynamics and international relations.
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