Intel and Advanced Micro Devices fell more than 2% on Monday after a report that China would limit the use of their chips and servers in government computers, potentially threatening billions of dollars in sales for the U.S. companies.
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.
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. "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.
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.
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