Intel, AMD shares fall on reports China restricts U.S. chips

Shares of Intel and AMD fell more than 2% on Monday (March 25) after reports that China will restrict the use of Intel and AMD chips and servers in government equipment.

The latest exchange in the ongoing chip trade war between China and the United States threatens billions of dollars in sales from tech giants, and it could be an interesting sequel after China warned that a proposed TikTok ban would “blow back” in the United States.

In recent days, the government in Beijing has laid out new guidelines to effectively phase out U.S. chips from Intel and AMD, and further plans to abandon Microsoft as part of a protectionist strategy to protect and support domestic suppliers.

China has been pouring resources into its semiconductor industry in recent years in response to Washington’s efforts to limit and stifle exports of highly sought-after chips, especially those at the forefront of development.

As part of these measures, China’s leading chipmaker SMIC has established a new production line in Shanghai to produce next-generation 5 nanometer (5nm) mobile processors. The chips are designed by tech giant Huawei as part of its homegrown Kirin range of smartphone processors.

How Intel and AMD’s revenue will be affected by China restrictions

The significance of the overall constraints is immediately reflected in the data, as China is Intel’s largest market in 2023, accounting for 27% of its revenue. For AMD, that’s less than a fifth, with 15% of its revenue coming from the vast Asian country, but still significant.

Stacy Rasgon, a senior at Wall Street research firm Bernstein, commented on the developments with the following analysis:

“A complete halt by the Chinese government to purchases of Intel and AMD CPUs could have a low-single-digit impact on revenue,” he said. He expected Intel to suffer losses of up to $1.5 billion and AMD to suffer hundreds of millions of dollars.

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