Intel and AMD stocks fell after reports emerged that China has instructed its state-owned telecommunications companies to phase out foreign chips. The move is part of the country’s broader push for technological self-sufficiency as tensions with the US continue to escalate. The new directive is expected to deal a significant blow to American chipmakers, who have long relied on China for a substantial portion of their sales.
The development comes amid growing concerns about the US-China trade war, which has already led to tariffs on billions of dollars worth of goods. The move by China to phase out foreign chips is seen as a significant escalation of the ongoing conflict between the two countries. It is also seen as a clear indication that China is determined to reduce its dependence on foreign technology and become a global leader in the tech industry.
Impact of China’s Directive on Intel and AMD Stocks
Market Response to China’s Announcement
On April 9th, 2024, China reportedly instructed its telecom companies to phase out foreign chips within three years. This directive has caused a negative impact on the stock prices of both Intel and AMD. Intel’s stock fell by 3.5%, while AMD’s stock fell by 4.2%.
The market response to China’s announcement was not unexpected, as China is a significant market for both Intel and AMD. The directive is expected to hurt the sales of both companies in China, which could lead to a decline in their revenue and profitability.
Historical Performance of Intel and AMD Stocks
Intel and AMD are two of the largest semiconductor companies in the world. Both companies have had a volatile stock performance in the past few years. Intel’s stock has been under pressure due to the company’s struggles in the mobile market, while AMD’s stock has been on an upward trend due to its success in the gaming and data center markets.
In 2023, Intel’s stock rose by 20%, while AMD’s stock rose by 40%. However, the recent news from China has caused a decline in both companies’ stock prices. It remains to be seen how this directive will impact the long-term performance of Intel and AMD’s stocks.
Overall, China’s directive to phase out foreign chips is expected to have a negative impact on both Intel and AMD’s stocks. The market response to the news has been negative, and the long-term impact on the companies’ performance remains uncertain.
China’s Push for Domestic Chip Production
China has been making efforts to reduce its reliance on foreign technology, and the latest move to phase out foreign chips is part of this broader push for technological self-sufficiency.
China’s Technological Self-Sufficiency Goals
China has set ambitious goals to become a global leader in advanced technologies, including artificial intelligence, 5G, and semiconductors. As part of this push, the country has been investing heavily in research and development, and encouraging domestic companies to develop their own technologies.
Potential Beneficiaries of the New Policy
The new policy to phase out foreign chips is expected to benefit domestic chipmakers, such as Semiconductor Manufacturing International Corp (SMIC), which is China’s largest chipmaker. SMIC has been investing heavily in research and development, and has been working to develop its own advanced chip technologies.
Other potential beneficiaries of the new policy include Huawei, which has been hit hard by US sanctions that have cut off its access to key technologies, including chips. Huawei has been investing heavily in developing its own chip technologies, and the new policy could help the company accelerate its efforts.
Overall, the push for domestic chip production is part of China’s broader efforts to reduce its reliance on foreign technology and become a global leader in advanced technologies. While the new policy is likely to cause some short-term disruption in the global chip market, it could ultimately help China achieve its long-term goals of technological self-sufficiency.
Global Semiconductor Industry Shift
With China’s recent move to phase out foreign chips in its telecom industry, the global semiconductor industry is experiencing a significant shift. This shift is expected to have a significant impact on the semiconductor supply chain and international trade partners.
Implications for the Semiconductor Supply Chain
China is one of the largest consumers of semiconductors in the world, and the country’s decision to phase out foreign chips is expected to have a significant impact on the semiconductor supply chain. This move is expected to increase demand for domestic chips, which could lead to a shortage of foreign chips in the market.
Semiconductor companies like Intel and AMD are likely to be affected by this shift, as they have a significant presence in the Chinese market. These companies may need to re-evaluate their strategies and focus on other markets to compensate for the loss of revenue from China.
Reactions from International Trade Partners
China’s move to phase out foreign chips has sparked reactions from international trade partners. The United States, for example, has expressed concerns about China’s protectionist policies and the impact they could have on American companies.
Other countries, such as Japan and South Korea, have also expressed concerns about the impact of China’s move on their semiconductor industries. These countries may need to re-evaluate their strategies and focus on other markets to compensate for the loss of revenue from China.
Overall, the global semiconductor industry is experiencing a significant shift due to China’s decision to phase out foreign chips. This shift is expected to have a significant impact on the semiconductor supply chain and international trade partners, and companies in the industry will need to adapt to these changes to remain competitive.