April 15, 2024

Intel logo displayed on a sign with grass in the foreground

Photo: Justin Sullivan (Getty Images)

Chipmakers Intel and Advanced Micro Devices (AMD) saw their stocks slip Monday morning after China introduced new guidelines eliminating their chips from government computers and servers in favor of Chinese chipmakers.

Intel stock was down about 3% Monday morning shortly after markets opened, while AMD stock was down about 1%. By mid-morning Intel had regained some ground to trade down about 2%, while AMD was down slightly.

The Chinese government’s new rules seek to block foreign technology from its federal computers, including operating systems like Microsoft’s Windows and other database software made overseas, the Financial Times reported. The guidelines require government agencies and higher-level party affiliates to require “safe and reliable” chips and operating systems when buying the technology. Introduced by China’s information technology and finance ministries in late December, the measures are now in effect.

Eighteen chips are currently approved by the nation for use; all are from Chinese companies, including Huawei and state-backed Phytium, which are both on the U.S.’s trade blacklist.

Chinese chip wars

Amid competition with China, the United States government is doubling down on its own chipmaking investments — and American semiconductor firms are cashing in. Intel, for one, was the latest chipmaker to receive funds from the CHIPS and Science Act, the U.S.’s $52.7 billion war chest to bolster domestic chipmaking. Intel is set to receive up to $8.5 billion in direct government funding from the act, and is also eligible for up to $11 billion in federal loans. The chipmaker also said it plans to benefit from an investment tax credit of up to 25%.

In another victory for the United States, Intel is eyeing a five-year, $100 billion U.S. expansion plan. Intel CEO Pat Gelsinger told reporters last week the chipmaker intends to build “the largest AI chip manufacturing site in the world” on land near Columbus, Ohio — one of the four states the company is investing its chipmaking ambitions in.

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