China’s 14th Five-Year Plan is a major issue for policymakers as the region looks for greater self-sufficiency from U.S. chipmakers and while its growing role in the electronics supply chain increases risk.
Contrary to other companies, AAPL will be a beneficiary amid increased political turmoil as it takes share at the high end of the China smartphone market.
Chip equipment makers will see heightened demand in China and new investments in Western markets, driven by greater aid from governments.
Traditional hardware companies are at risk to see retaliation from China, while leading edge chipmakers will largely be immune.
Chipmakers may once again shy away from large deals as China looks to use chipmaking as a tool against the U.S.
We view AAPL and INTC along with chip equipment providers as the biggest winners amid the current China/U.S. landscape. Memory companies and traditional hardware companies (HPQ/DELL) could be among the most at risk.