Insights on China’s Chip Market: Investing Amidst the Storm Insights on China’s Chip Market: Investing Amidst the Storm

Written By Michael Gary Scott

Trade wars are always destructive. The current escalation in the chip wars will be no different. The Biden administration banned the use of equipment from China’s Huawei and ZTE over alleged national security concerns. Semiconductor stocks like Nvidia (NASDAQ:NVDA) were prohibited from selling their high-end chips to China.

The Impact of Beijing’s Retaliation

Beijing is now retaliating by barring the country’s telecommunications companies from utilizing chips from American chipmakers. China’s largest telecoms China Mobile and China Telecom must now choose from a list of local suppliers. This move puts a number of U.S. semiconductor stocks at risk, as their sales growth heavily relies on Chinese companies.

Chip Stock Concern: Advanced Micro Devices (AMD)

In this photo illustration, the AMD logo is shown on a smartphone screen.

Advanced Micro Devices (AMD) is facing challenges due to its significant reliance on the Chinese market. Despite generating buzz with new high-powered AI chips, China remains a critical end market. In AMD’s fourth-quarter filing, sales to China totaled over $3.4 billion, representing 15% of its total annual revenue of $22.7 billion.

Struggles for Intel (INTC)

Intel (INTC) - Quantum Computing Stocks to Buy

Intel faced challenges as well, with 27% of its revenue coming from China last year. The chipmaker highlighted that $3.2 billion, or 6% of its total revenue last year, was dependent on U.S. export control authorizations. China remains Intel’s largest market, with uncertainties surrounding future revenue growth.

Understanding Arm Holdings’ (ARM) Resilience

ARM company logo on the paper document and large microchips placed around. Illustrative for electronic chip manufacturer.

Arm Holdings has managed to navigate through export controls to China via its joint venture, Arm China. Despite facing challenges, Arm Holdings saw a 7.9% rise in its sales to China during the fiscal third quarter, reaching $206 million. Arm China represents almost a quarter of Arm’s revenue.

See also  Unlocking Potential: Morgan Stanley Advocates Buying Two Languishing Dow Stocks

Investors may find solace in Arm Holdings as a semiconductor stock that continues to grow its business in China and beyond.