China risks for major technology extend far beyond Nvidia

Copyright © HT Digital Streams Limit all rights reserved. Adam Levine, Barrons 4 min Read 17 Apr 2025, 07:17 PM IST All non-Chinese chip manufacturers are facing risk in China because the government wants to break the country’s dependence on outside technology. (Beeld: Pixabay) Summary Within the largest companies in the sector, the least affected players are affected by China risk, alphabet and meta platforms. The news that both NVIDIA and Advanced Micro Devices in the current quarter charge due to a new US rule that limits slides sales are paying attention to a broader problem: much more technical enterprises, in the production of chips and beyond, runs off the risk than Beijing and Washington Square. All non-Chinese chip manufacturers are at risk in China because the government wants to break the country’s dependence on outside technology. Until last year, it remained a distant goal, but the transition began with restrictions on Chinese purchases from local and central government of new computers and servers. The risks of that shift, and from the trade war in general, range from slides to software and even the production of devices such as iPhones. There are 18 central processing unit chips approved for Chinese governments, and none of them are from Intel or AMD, the two dominant players worldwide. Many of the CPU chips have intellectual property of poor, a UK company, but in the longer term it has the same risk in China as other non-Chinese chip enterprises. Microsoft’s Windows operating system and Oracle’s database software is the forefront of the problems for US software businesses. Along with our CPU chips, new computers and servers purchased by the Chinese government will not manage windows, but rather a choice of six homemade options. When Chinese authorities unveiled restrictions on PC and government’s purchases last year, they also listed 11 domestic options for databases. These are long -term problems because the shifting of the installed base of software, computers and servers for the entire country will take time. The transition, starting with the acquisition of the government, would have to transform the Chinese supply chain. But US companies that make chips domestically, such as Texas Instruments and Intel, already see their Chinese sales threatened. While the Chinese government issued exceptions to the 125% retaliation tariff on US goods, it did not include relief for the US manufactured chips. Because the Chinese government considered Taiwan as part of China, chips made there for US companies such as Apple, Nvidia, Qualcomm and AMD will not face the tariff. In fiscal 2024, Intel received 29% of its sales from China. The figure was 19% for Texas Instruments. For the time being, smartphones and computers imported into the US did not face any of the most recent rates, but the Trump administration indicated that it would place a separate set of rates on those products in a month or two. Among major technical companies, Apple faces most in China because both the production and demand for its devices are affected. Although it now has a lower volume meeting in India and Vietnam, Apple puts together a large majority of its devices in China. It will be difficult to change so quickly. While Chinese manufacturing provides relatively inexpensive labor, it also offers Apple the scale needed to produce a large number of devices. China is also central to the entire East Asian technical supply chain. The only other country that can match China on scale is India, where Apple has started to move iPhone production. Estimates for India’s production of iPhones range from 15% to 20% of the total, although Apple still pays taxes on components it brings to the country. On the demand side, Chinese sales, including Taiwan, represented 17% of Apple’s revenue in fiscal 2024. While the trade war is at greater risk, the glare may already come from the Apple brand in China. The sales there were 8% lower in fiscal 2024. Again, due to its large scope, India is also Apple’s response to the risks of claiming it in China. Apple started a Perspers with a full court in 2020 with the online Indian Apple store, followed by retail stores in 2023. Tim Cook, CEO of Tim Cook, regularly calls for Indian sales in earnings calls. But Apple is a Behemoth, and any changes to supply and demand will take time. Amazon.com, meanwhile in another category because it is mainly a trader. It has much higher rates on imports than before, led by a rate of at least 145% on most Chinese goods. Goldman Sachs analyst Eric Sheridan estimates that Chinese goods are 20% to 40% of Amazon’s first-party goods. Those expenses will rise significantly in a trade war. Sheridan did not make a comparable forecast for Amazon’s robust third-party business, accounting for 37% of its retail sales in 2024. This injected uncertainty into the prospects. Amazon knows what’s going on in the supply chain for its own stock, but it may not have the same level of detail for its third-party sellers. Amazon did not immediately respond to a request for comment. Inside Big Tech, the least affected by China risk is alphabet and meta platforms. Services such as Google Search and Facebook do not work in China, but the two businesses get some revenue from Chinese businesses advertising to clients outside the country. A merchandise could catch up in the 11% of the 2024 income that meta came from China. Alphabet does not break out Chinese sales, but 16% of the 2024 revenue was from the Asia-Pacific region. Write to Adam Levine at [email protected], catch all the business news, market news, news reports and latest news updates on Live Mint. Download the Mint News app to get daily market updates. More Topics #china Rates #Trade War #United State Mint Special