China’s export market worsened after the country reported a decrease. Exports fell by 7.5% Y/Y in March by value. Imports increased by 1.5%. The weekend before, the Treasury Secretary visited the country. After bringing up China’s unfair trade practices in the electric vehicle and solar panel market, an Ohio senator urged President Biden to permanently ban Chinese-made vehicles from entering the U.S.
The tension buildup led to rumors reported by the Wall Street Journal last Friday. The media outlet reported that Chinese officials are directing its largest telecom carriers to phase out foreign chips. They want state-owned mobile operators to cut their reliance on Intel (INTC) and Advanced Micro Devices (AMD).
Both countries are decoupling in key industries. The West is de-risking its supply chain away from China. Corporations do not want a repeat Covid lockdown like in 2020-2022. China wants to de-risk from the West by developing semiconductors in-house.
Value investors should add Intel to the watch list radar. The stock broke down below the $42 – $46 trading range. Should shares re-test their 5-year lows in the $25.00 – $30.00 range, consider starting a small position.
AMD trades at too high a premium at this time. The firm does not have the U.S. approval to sell server AI chips to the Chinese market. This limits its growth to the budget of the mid-tier AI server market. Furthermore, Nvidia (NVDA) will continue to protect its moat in the high-end AI markets.
