Is This Top Chip Stock a Buy With Limits to Sales In China in Place?
Early in September, the U.S. Department of Commerce said it was restricting the ability of top semiconductor designers Nvidia and Advanced Micro Devices from selling advanced AI chips to China. But these restrictions won't just apply to advanced semiconductor designs. The Commerce Department is also putting restrictions on chip fab equipment too, in an effort to limit China's ability to make its own advanced semiconductors.
That's a potentially big issue for top chip equipment maker KLA Corporation (NASDAQ: KLAC). The company, along with other top fab equipment outfits Applied Materials and Lam Research, was informed earlier this year of restrictions. But a report from Reuters says the Commerce Department is readying new limits on KLA and its peers' sales to China. Is KLA stock a buy given potential geopolitical disruption to its business?
Beijing has been serious about funding the development of its own domestic chip production industry. This incremental investment over the years has been a boon for U.S. technologists like KLA. Specifically, KLA said 29% of its fiscal year 2022 revenue (for the 12 months ended June 2022) came from China, totaling $2.66 billion. This made China KLA's largest geographical market in the last year. The sales figure is up from just 12% of revenue coming from China in fiscal year 2017.
Source Fool.com
