The Financial Times (FT) reported on Sunday that China has implemented new guidelines to eliminate US microprocessors, like those from Intel (NASDAQ:INTC) and AMD (NASDAQ:AMD), from government computers, marking its latest push for promoting domestic technology.
This move mirrors the escalating tech rivalry with the US, which has sanctioned Chinese firms and promoted local tech production while restricting advanced chip exports to China.
Shares of AMD and INTC fell 2.2% and 2.5% in premarket trading Monday, respectively.
In their first take on the potential impact of the new China guidelines, Bernstein analysts “very roughly” estimated “that a total cessation of China governmental purchases of Intel and AMD CPUs might impact revenues by LSD, but with a bigger earnings impact for Intel.”
“Some very rough math suggests such a halt to purchases might hit overall Intel and AMD revenues by low single digits relative to current FY2024 consensus (perhaps ~$1B-$1.5B for Intel and a few hundred million dollars for AMD),” analysts noted.
This scenario could lead to a mid to low double-digit percentage decrease in Intel's earnings per share (EPS), starting from a consensus base of approximately $1.33 for FY2024, while AMD's EPS might see a low to mid single-digit percentage impact from its FY2024 consensus of $3.63, they said.
Bernstein made no rating changes for INTC and AMD, maintaining both at Market Perform.