Over the weekend, China advanced its efforts to replace foreign technology with domestic alternatives, issuing new guidelines to phase out US microprocessors, such as those from Intel (NASDAQ:) and AMD (NASDAQ:), in government computers.
This move also targets Microsoft’s (NASDAQ:) Windows OS and foreign database software, promoting local options and aligning with a broader push for technology self-reliance in state-owned enterprises.
However, MSFT “is unlikely to be materially impacted” by the ban, Macquarie analysts commented in a Wednesday note.
“In general, US enterprise software companies have little to no domestic market exposure in China even if they serve Chinese multinational corporations globally,” analysts said.
In 2023, Microsoft President Brad Smith said to Congress that only about 1.5% of Microsoft’s revenue comes from China. According to a January report by the New York Times, the company’s China revenue primarily comes from Windows, Bing, cloud computing, and various corporate applications.
“In an unlikely worst-case scenario, if all of Microsoft’s China revenue disappeared, we estimate this would be a ~$0.14/share full-year impact,” analysts wrote.
