Apple, Intel likely to benefit from China’s chip manufacturing push

Apple, Intel and semiconductor equipment companies are the most likely beneficiaries from China’s current push to become more self-sufficient regarding chip production, according to a new research note from CFRA.

Traditional hardware companies like Dell and HP and memory companies are the most likely to feel a negative impact.

Earlier this year, Beijing unveiled its 14th five-year plan targeting the development of an integrated circuit ecosystem, including design, manufacturing and equipment. The five-year period runs from 2021 through 2025.

CFRA analyst Angelo Zino says the political tension between the U.S. and China is likely to benefit Apple (AAPL), which will continue to capture high-end smartphone market share in China.

Intel is also well-positioned with the company’s IDM 2.0 strategy to become a global foundry player expected to gain traction by 2023 after focusing on capacity expansion in the U.S. and Europe.

Semiconductor manufacturing equipment is expensive to purchase let alone develop and foreign chip equipment companies will likely benefit from China’s self-sufficiency push, writes Zino. Chipmaker stocks include Applied Materials, KLA, Lam Research and ASML.

“Memory companies face the biggest risks, at least initially, with regards to China’s more aggressive tactics to build a domestic manufacturing semiconductor industry,” says the analyst, naming Micron and Western Digital.

Traditional hardware companies, meanwhile, are “most at risk of China retaliation given the easy substitutes available” like Lenovo and the potential “impact of banning a well-known U.S. company.”

Western Digital and rival Seagate were among the largest S&P 500 decliners earlier today, pulling back from recent rallies driven by the cryptocurrency Chia.

HP and Dell are slated to report earnings results on August 26 amid softening PC shipment growth. Seeking Alpha