Companies With the Most Revenue Exposure to China

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An economic slowdown in China could ripple through the U.S. tech sector, which derives a large percentage of its revenue from activity in the region.

Anxiety over China’s economic growth has weighed on markets this week. China’s economy grew 0.8% in the second quarter, lower than the growth in the first half from the same time last year. Exports are falling along with consumer prices.

Unemployment among China’s youth rose every month this year through June, topping 20%. Officials said they would stop reporting youth unemployment.

The property sector is also hobbled. This month, China’s largest private real estate developer, Country Garden, missed some bond payments and said it expected to post a record loss for the first six months of the year.

All of this is adding to pressure on companies with exposure in the region. The

VanEck Semiconductor ETF
(ticker: SMH) is down 9.4% in August. It is still up 43% so far this year.

Barron’s and Dow Jones Market Data examined which

S&P 500
companies had the highest percentage of their revenue in the previous year from the People’s Republic of China, which is otherwise called the mainland, and its Macau and Hong Kong territories. The data analyzed excluded Taiwan.

Eight of the 10 companies with the largest share of revenue from China are chip makers or related to the chip industry, with Qualcomm (QCOM) at the top.

Qualcomm

derived 63.6% of its revenue from China as of Sept. 30. Almost all of that was from the mainland, with 1.2% from Hong Kong. The stock is down 17% this month, according to FactSet. Qualcomm didn’t respond to a request for comment.

Monolithic Power Systems

(MPWR) was next on the list. The maker of semiconductor-based power electronics equipment derived 51.3% of its revenue from China, all of it from the People’s Republic, as of Dec. 31. Its stock is down 13% this month. It also didn’t respond to a request for comment.

Texas Instruments

(TXN) is third on the list, with 48.2% of revenue coming from China, all of it from the mainland as of Dec. 31. Its stock is down 7.9% in August. Texas Instruments told Barron’s in an email that about 25% of its revenue came from China-headquartered customers in 2022. “Many of our customers sell their products globally. Therefore, changes in demand from any region can affect us,” the company said.

Other top companies include

Western Digital

(WDC), which makes data storage devices,

NXP Semiconductors

(NXPI), and

Broadcom

(AVGO).

NXP derived 34.9% of revenue from mainland China as of the end of last year. Its stock is down 13% this month. The company pointed out to Barron’s that its best estimate is that half of its sales into the region are for re-export, meaning its chips are sold to Chinese companies that embed them in products and sell them around the world. NXP also told Barron’s that its percentage of revenue from China dropped to 30% as of the second quarter of 2023.

Not every company in the top 10 are chip-makers, or even tech companies. One exception is

Las Vegas Sands

(LVS), the casino operator. It ranks fifth, with 39.3% of its revenue from China, all of it from the gambling hub of Macau. Its stock is down 11% in August.

Albemarle

(ALB), a specialty chemical maker that has a big lithium business, ranks eighth with 32.3% of revenue from China. Its stock is down 14% this month.

Albemarle didn’t comment, while Las Vegas Sands didn’t respond to a request for comment.

Just off the list in 11th place is the cosmetics firm

Estée Lauder

(EL), with 29.7% of revenue from the mainland. Its stock is down nearly 10% this month. Estée Lauder didn’t respond to a request for comment.

Company / Ticker	Share of Revenue	Data as of
Qualcomm / QCOM	63.6%	9/30/2022
Monolithic Power Systems / MPWR	51.3%	12/31/2022
Texas Instruments / TXN	48.2%	12/31/2022
Western Digital / WDC	43.5%	6/30/2022
Las Vegas Sands / LVS	39.3%	12/31/2022
NXP Semiconductors / NXPI	34.9%	12/31/2022
Broadcom / AVGO	34.3%	10/31/2022
Albemarle / ALB	32.3%	12/31/2022
Lam Research / LRCX	30.7%	6/30/2022
ON Semiconductor / ON	30.7%	12/31/2022

Note: Percentage of revenues from mainland China, Macau, and Hong Kong combined.

Sources: FactSet, Dow Jones Market Data.

Write to Liz Moyer at liz.moyer@barrons.com