The trade war headlines aren’t going away, which is actually beneficial if you’re an investor and need to know whether political decisions could negatively impact markets. The White House has presented the argument that an unfair trade balance is damaging American national security interests and taking jobs away from regular working citizens. However, a prolonged trade war, particularly with China, has the potential to slash revenues of some of the largest American companies. Investors would be directly impacted.
Several prominent American businesses could lose out if the Chinese government chooses to levy tariffs on their products or interrupt operations through supply chains and regulatory hurdles.
Six American Companies and The Percentage of Revenue They Generate in China
- Apple Inc. (NASDAQ: AAPL) – Apple’s revenue fluctuates in China but ranges from around 18% to 25% in any given year. Lately the company has been growing Chinese revenues and currently makes over $44 billion from Chinese smartphone, software, and computer sales.
- Intel Corp. (NASDAQ: INTC) – Intel is the world’s largest and most prominent microprocessor company and it generates over 23% of its revenue in China. That revenue is worth $14.7 billion every year.
- Qualcomm Inc. (NASDAQ: QCOM) – Qualcomm’s ‘system on a chip’ microprocessors are used in products ranging from cell phones to computers and IoT devices. The company generates 64% of its revenue in China, with a total value of $14.5 billion.
- Micron Technology (NASDAQ: MU) – Micron is a computer memory chip manufacturer with diversified interests around the world. Even so, 40% of their revenue comes from China, with a value of $10.3 billion.
- Broadcom (NASDAQ: AVGO) – One of the largest chipset manufacturers in the world, Broadcom makes more than $9.5 billion in China, thanks to the huge demand for their products in the Chinese manufacturing industry. 48% of the company’s revenue is generated in China.
- Texas Instruments Inc. (NASDAQ: TXN) – An American microprocessor and technology company that makes more than $6.6 billion in revenue from the Chinese market. Over 40% of the company’s revenue comes from China.
How Vulnerable Are These Companies?
China won’t make light of any decision to apply tariffs to the products from companies on this list. Semiconductor technology is incredibly important to China’s own manufacturing industry. However, with the pressure that the White House is applying, the risk is there. If investors sense any uncertainty then stocks in these companies (and others) could start to slide, particularly in a discounted market.
For now, the markets are resilient and both countries are selecting tariffs carefully to minimize internal damage. No matter how the trade disputes are worked out diplomatically, understanding the risk in the market is critical for any investor.