Shares of Advanced Micro Devices and Intel experienced declines on Friday following a report by The Wall Street Journal indicating that China has instructed its largest telecom carriers to stop using foreign chips. According to the Journal, Chinese authorities issued this directive at the beginning of the year, specifying that telecom systems must transition to domestically-produced core processors by 2027.
Chinese officials issued the directive earlier this year for the telecom systems to replace non-Chinese core processors by 2027, the Journal reported, citing people familiar with the matter. The report said the mandate would impact AMD and Intel.
Both stocks traded down as much as 4% on Friday afternoon.
Intel declined to comment on the report. AMD didn’t immediately respond to a request for comment.
China accounted for 27% of Intel’s revenue in 2023, making it the company’s biggest market. AMD generated 15% of sales from China, including Hong Kong, last year. Their reliance on China underscores the continued importance of the world’s second-biggest economy despite U.S. regulations aimed at curbing chip exports to the country and China’s efforts to be less dependent on foreign technology.
The decision by Chinese authorities to prioritize domestically-produced chips over foreign alternatives underscores the country’s strategic shift towards self-sufficiency in critical technologies. With tensions simmering in international trade relations, China’s move is seen as a bid to assert greater control over its semiconductor ecosystem and reduce vulnerabilities to geopolitical risks. As a result, Intel and AMD, among others, must reassess their strategies and potentially navigate a more complex landscape characterized by protectionist measures and increased competition from Chinese semiconductor firms.
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