In a trade war with China, US chipmakers could be the biggest casualties


By revenue, chipmakers face the greatest risks in escalating trade tensions with Beijing.

Among U.S. industries, semiconductor and semiconductor equipment companies have the highest revenue exposure to China at 52 percent, Morgan Stanley equity strategists said in a June 12 report.

Chipmaker Qualcomm has 65 percent revenue exposure to China, and optical components manufacturer Lumentum has 23 percent exposure, the report said in a list of 20 stocks most sensitive to China.

Source: Thomson Reuters, Morgan Stanley Research Estimates

U.S. stock index futures fell sharply overnight after a renewed war of words over tariffs between the Trump administration and Beijing.

Shares of major chipmakers tumbled in premarket trading Tuesday. Qualcomm and Micron fell more than 1 percent, while Intel dropped more than 1.5 percent. Broadcom fell about two-thirds of a percent. Skyworks Solutions traded 1.9 percent lower. Lumentum dropped 4 percent.

Last week, the Trump administration said 25 percent tariffs on $34 billion worth of Chinese imports will take effect July 6. Beijing quickly retaliated with duties on $34 billion worth of American goods that will also go into effect July 6.

If China does not change its practices and goes through with the tariffs, the U.S. will impose more tariffs, President Donald Trump said late Monday in a statement. He has asked the United States Trade Representative to identify $200 billion worth of Chinese goods for additional tariffs of 10 percent. Beijing responded by saying China will protect its interests.

That said, China’s list of tariffs released Friday primarily covered agricultural products and automobiles.

The Morgan Stanley analysts also pointed out in the report that semiconductors are components of products sold elsewhere, so negative impact from the high revenue exposure to China “is not as meaningful” as it might be in other industries.

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