If you think Apple has a big "China problem" — you'll be shocked to know it's tiny compared with some other S&P 500 stocks.
Ten stocks in the S&P 500, including Qualcomm, Monolithic Power and Texas Instruments, got more than 27% of their revenue from China (including Hong Kong) or Macau in their latest report annual results, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
That's much larger than Apple's 18.8% of revenue from China in its latest annual report. And that's potentially a risk as U.S. and China relations strain.
Amazingly, investors don't seem to be pricing in the China risk yet. Shares of the 10 companies with the most Chinese exposure are up 30% this year, outstripping the S&P 500.
But that might be changing — fast. Shares of Apple dropped 3% Thursday on the news some of its products may be blocked for use in China's government.
"The Nasdaq is sinking as one bad Apple spoils a bunch of mega-cap tech stocks," said Edward Moya at Oanda. "Apple's growth story is heavily reliant on China and if the Beijing crackdown intensifies that could pose a big problem to the bunch of other mega-cap tech companies that rely on China."
Big China Slowdown Stings
Relying on China isn't a risk only due to political strains with the West. The economy there is sputtering.
The China economy grew by just 3.2% in the second quarter. That's anemic by the nation's standards. Exports are also falling.
Which company is most exposed to the mess in China? Computer chipmaker Qualcomm. The company in its latest annual report stated 63% of revenue is from China. Qualcomm is one of the China-exposed companies that is down on a stock-price basis: 3.2% this year.
Tech Relies On China
Tech is one of the most dependent sectors on China. Of the 10 S&P 500 companies most exposed to China, 80% are in the information technology sector.
Following Qualcomm, it's Monolithic Power, which designs power inputs for computer chips. The company got 52% of its revenue from China last year. Even so, shares are up more than 40% this year.
Contrast that with Texas Instruments, which got 49% of revenue from China. Shares are off 0.4% this year. The company's profit is expected to fall by more than 23% this year.
Investors might not be worrying too much about their portfolio exposure to China. But that might change as relations with the U.S. strain more, and the economy slows more.
Exposure To China
S&P 500 companies that get most revenue from China
| Company | Ticker | China % of revenue | Sector |
|---|---|---|---|
| Qualcomm | 63.6% | Information Technology | |
| Monolithic Power Systems | 52.3 | Information Technology | |
| Texas Instruments | 49.2 | Information Technology | |
| NXP Semiconductors | 35.6 | Information Technology | |
| Broadcom | 35.0 | Information Technology | |
| Viatris | 33.1 | Health Care | |
| Albemarle | 33.0 | Materials | |
| Corning | 30.0 | Information Technology | |
| Applied Materials | 28.1 | Information Technology | |
| ON Semiconductor | 27.8 | Information Technology |
