The trade war between the U.S. and China continued ever since Trump was the U.S. President. When the U.S. stepped up tensions by restricting semiconductor exports to the country, China responded. It will ban the use of Intel (INTC) and AMD (AMD) processors in government computers.
In 2023, China accounted for 27% of Intel’s sales, compared to 15% for AMD. Fortunately, Bernstein analyst Stacy Rasgon estimated that government purchases were only 10%. Although the impact of the ban is negligible, such restrictions may worsen.
China may extend the chip ban beyond the government. The U.S. could respond to that by encouraging AMD and Intel to shut down its Chinese factories.
Signs of trade tensions with the U.S. have yet to show signs of thawing. However, China is softening its stance with other trade partners. Last week, it lifted its penalties on Australian wine after more than three years.
AMD has a work-around version of its high-end graphics card that is not subjected to the U.S. export ban. Similarly, Nvidia (NVDA) has a lower-powered AI chip that it sells to Chinese customers.
Your Takeaway
Markets did not react to China’s actions against the two chip giants. The damage to revenue is minimal. Additionally, the firms may expand their AI-related products to offset the lost business.
AMD stock has a good chance of continuing its uptrend. Conversely, Intel is stuck in a downtrend. Both are attractive stocks to watch.
