Intel and Advanced Micro Devices (AMD) witnessed their stock price fall more than 2% on Monday (Mar.25) following reports China would restrict the use of their chips and servers in government devices.

The latest salvo in the ongoing chip trade war between the USA and China poses a threat to billions of dollars in sales for the tech giants and could be an intriguing sequel to the story after China warned the proposed TikTok ban would “come back to bite” America.

In recent days, the Beijing administration has set out fresh guidelines to effectively phase out US chips from Intel and AMD with further plans to jettison Microsoft as part of a protectionist ploy to favor and support domestic providers.

China has been pouring significant resources into its semiconductor industry in recent times as it contends with moves from Washington to restrict and stifle the export of the highly sought-after chips, especially those on the cutting edge of development.

As part of these measures, the country’s leading chipmaker SMIC has established new production lines in Shanghai to manufacture next-generation 5-nanometer (5nm) mobile processors. The chips are designed by technology giant Huawei as part of its homegrown Kirin line of smartphone processors.

How will Intel and AMD revenues be impacted by the Chinese restrictions

The importance of the headline curbs is instantly reflected in the figures as China was Intel’s largest market in 2023 with a 27% share of its revenue. It was less than one-fifth for AMD with 15% of its revenue coming from the sprawling Asian state but still of considerable importance.

Stacy Rasgon, a senior figure at Wall Street research firm Bernstein commented on developments with the following analysis:

“A total cessation of China governmental purchases of Intel and AMD CPUs might impact revenue by low-single digits,” he said, with a prediction of a maximum $1.5 billion hit for Intel and a few hundred million dollars for AMD.

Image credit: Ideogram

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