The
Financial Times reported over the weekend China has introduced
guidelines to phase out U.S. chips from the companies and also
wants to sideline Microsoft's Windows and foreign-made database
software in favor of domestic options.
Beijing been trying to reduce its reliance on foreign firms by
building out its local semiconductor industry as it grapples
with U.S. export curbs on technology including cutting-edge
chips.
The latest move could make a big dent on the chip firms'
earnings as China was Intel's largest market in 2023 with 27% of
revenue, while AMD drew about 15% of its sales from the country.
Microsoft, whose shares were down about half a percent in
premarket trading, does not break out its revenue from China.
"A total cessation of China governmental purchases of Intel and
AMD CPUs might impact revenue by low-single digits," said
Bernstein analyst Stacy Rasgon, predicting a hit of up to $1.5
billion for Intel and a few hundred million dollars for AMD.
But he said Intel could face a higher hit to its profit - of
mid-single digits to low-double digits, "given higher exposure
and the vagaries of a worse cost structure".
Intel, AMD and Microsoft did not respond to Reuters requests for
comment. The chip firms were on track to shed a combined $11
billion in market value based on premarket movements.
China's industry ministry had in late December issued a
statement with three separate lists of central processing units,
operating systems and centralized database deemed "safe and
reliable" for three years after the publication date, all from
Chinese firms, Reuters checks showed.
Apple has also been caught up in rising Sino-U.S. tensions, with
Bloomberg News reporting in December that Chinese agencies and
state-backed firms have asked their staff to not bring iPhones
to work.
(Reporting by Aditya Soni in Bengaluru; Editing by Arun Koyyur)
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