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Signs have emerged that the Chinese economic recovery is losing momentum coming out of the pandemic, and if the negative trend continues, these U.S. companies with high revenue exposure to the region could get hurt. Goldman Sachs analyzed company 10-K filings to determine the geographic revenue exposure of each stock in the S & P 500. They found a number of stocks with revenue exposure to Greater China of over 40%. If China continues to show an uneven path of recovery in the wake of its stringent Covid restrictions being lifted, these stocks could be hurt. The initial rebound in consumer and business activity early in the year has largely faded. However, if China ends up injecting more policy stimulus to boost growth, these companies tied to the nation could see a near-term tailwind. Companies that generate a significant amount of sales from Greater China were exclusively in the chip industry, according to Goldman. Semiconductors have been caught up in the U.S.-China battle for tech dominance. Washington has tried to cut China and Chinese firms off through sanctions and export restrictions in the past few years, including blacklisting Huawei. The U.S. also introduced broader chip restrictions last year, aiming to deprive Chinese firms of critical semiconductors that could serve artificial intelligence and more advanced applications. Monolithic Power Systems is on the top of the list with 65% of its 2022 revenue derived from Greater China, according to Goldman. The stock has gained about 18% this year. Qualcomm also generated more than 60% of its revenue from the region. Qualcomm recently saw a big decline in sales from handset chips, a core business for the company. CEO Cristiano Amon also said it had not seen evidence that smartphone sales are recovering in China. Other stocks on the list include Applied Materials, Lam Research, Nvidia, Western Digital and NXP Semiconductors.
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