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AMD, Intel Shares Fall 4% as China Orders Removal of Foreign Chips

China mandates telecoms to replace foreign chips by 2027, impacting US firms AMD and Intel with significant revenue from China.

By Barry Stearns

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4/12, 11:59 EDT
S&P 500
iShares 20+ Year Treasury Bond ETF
iShares 7-10 Year Treasury Bond ETF
Advanced Micro Devices, Inc.
Broadcom Inc.
Intel Corporation
Marvell Technology, Inc.
NVIDIA Corporation
QUALCOMM Incorporated
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Key Takeaway

  • AMD and Intel shares fell up to 4% after China ordered telecoms to stop using foreign chips, impacting their largest market.
  • China's directive targets non-Chinese core processors by 2027, affecting 27% of Intel’s revenue and 15% of AMD’s sales.
  • The move follows U.S. restrictions on chip exports to China, highlighting the escalating tech tensions between the two countries.

China's Chip Directive Hits US Giants

Shares of Advanced Micro Devices (AMD) and Intel saw a downturn on Friday following a report by The Wall Street Journal. China has mandated its largest telecom carriers to replace foreign chips with domestic ones by 2027, affecting these US semiconductor leaders. Intel and AMD, which declined to comment on the situation, saw their stocks drop by as much as 4%. This move underscores China's push towards technological self-sufficiency, impacting companies that heavily rely on the Chinese market. Intel and AMD generated significant portions of their revenue from China, 27% and 15% respectively, highlighting the critical role the Chinese market plays for these semiconductor giants.

US-China Semiconductor Tensions Escalate

The backdrop to China's recent directive is a series of US export controls aimed at limiting China's access to advanced semiconductor technology. These measures, starting in October 2022, have targeted the flow of chips and equipment critical for artificial intelligence and military applications. The US Department of Commerce's sweeping rules introduced in 2022 marked a significant escalation in the tech tensions between the two countries. This ongoing semiconductor war has seen both nations taking steps to curb each other's technological advancements, with the US aiming to cut off Beijing from key semiconductor equipment and China striving for self-reliance in chip manufacturing.

Navigating Export Curbs and Market Dynamics

Despite the tightening restrictions, US chipmakers like Intel, Broadcom, Qualcomm, and Marvell Technology continue to see China as a vital market. These companies have been navigating the export curbs by modifying products and seeking new licenses to maintain their presence in China. For instance, Nvidia and Intel have developed modified AI chips for the Chinese market, and AMD has designed an AI chip specifically for China, pending US approval. The Semiconductor Industry Association, representing these firms, has called for easing tensions, highlighting the importance of the Chinese market for US semiconductor companies.