Several Wall Street analysts said Monday that Intel (INTC.O) and AMD (AMD.O) might lose billions of dollars in sales if China prohibits their processors and servers on government systems.
Financial Times reported over the weekend, opens new tab China wants enterprises to stop using U.S. chips, Microsoft's (MSFT.O), Windows, and foreign database software in favor of domestic ones.
As China faces U.S. export restrictions on technology like cutting-edge semiconductors, Beijing is growing its semiconductor industry to decrease its dependence on foreign corporations.
Intel's top market in 2023 was China, where it earned 27% of its revenue, while AMD earned 15%. The recent move could hurt chip makers' earnings. Microsoft does not break out China revenue.
According to Bernstein analyst Stacy Rasgon, "A total cessation of China governmental purchases of Intel and AMD CPUs might impact revenue by low-single digits," Intel could lose $1.5 billion and AMD a few hundred million.
Intel's profit could drop by the mid-single to low-double digits "given higher exposure and the vagaries of a worse cost structure". In afternoon trading, Intel sank 1.6%, Microsoft 1%, and AMD slightly up following early losses.
In late December, China's industry ministry released three lists of Chinese enterprises' central processing units, operating systems, and centralized databases deemed "safe and reliable" for three years.
In December, Bloomberg News reported that Chinese agencies and state-backed enterprises have urged employees not to bring iPhones to work due to escalating Sino-U.S. tensions.
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