China exposure: MU, NVDA, SWKS

Just a question if anyone has given any thought as to how trade war, tariffs might affect revenue of some of the stocks we discuss here?

I ran across this article this afternoon.…

On the surface, I don’t think most of the SAAS stocks would be affect much. Micron, however, gets about 50% of revenue from China. At least according to this table. Skyworks, if anyone here is still in, is at 80%. NVDIA is listed at 18%, but I imagine even that 18% would be less affected than the other hardware suppliers.

I admit, I know very little of the details, but my understanding of the tariffs will be on good, raw materials, not the type of “services” many of our other companies provide.

Feel free to chime in with thoughts or set me straight if I am way off in my thinking.

I still have a small 1% position in SWKS, and started building a position in MU, which is also at about 1%. NVDA is a 7% position for me, but feel more comfortable with it in the China arena. It just hit me too - anyone still in SKX here maybe taking a hit in revenue since I believe China was a key in their “new” distribution model and market. I have not been following them as closely since exiting, so I may be remembering wrong.



Since we buy several times more goods from China than we sell to China, maybe this game won’t go the full 9 innings. If it does, all economies will take a hit. On the bright side the U.S. would probably get a new CEO as a result.

Dan, thinking positive thoughts


I’m sort of an amateur student of Chinese political history, especially since the revolution which succeeded in 1949. About two years after Mao’s death in 1976 Deng Xiaoping became the leader of China. The Chinese foreign policy has been remarkably consistent ever since that time. In a nutshell, they simply accept foreign government and leadership as it is. They do not judge the form of government. They do not challenge or dispute foreign leadership. They do not question how a foreign leader has come to the position (s)he is in. All of this is simply taken at face value. The government is what it is, the people in leadership positions are who they are. When it comes to trade or any other aspect of foreign relations they simply and rather objectively evaluate the situation and try to do what they think will be most beneficial to China. It makes no difference if the foreign leader is a venal, amoral autocrat or a democratically elected, well educated and worldly individual. The foreign leader is who and what (s)he is. That’s the person they must deal with. That’s the way it’s been since 1978. There is some evidence that there might be some changes to this approach under president Xi. But, so far it seems to be largely the Chinese approach to foreign relations.

Due to this approach, the Chinese have far more experience in dealing with all manner of foreign leaders than do the Americans. America had often viewed foreign relations in a far more complicated and nuanced manner. American foreign policy is influenced by the form of foreign government. American foreign policy has often been guided by moral judgment. American foreign policy frequently measures foreign leadership based on American ideals, morays and standards of conduct. America has a long history of political involvement in the affairs of foreign nations.

I don’t want to start a political debate on Saul’s board, there are other venues for that. This is simply my perception as an amateur observer of how things stand. I’m not taking sides, not here anyway.

As an investor, there are some implications that can be drawn from this. The Chinese are most likely to focus their retaliation to be most damaging to areas that are in support of the source of the tariffs aimed at them. Writ large, this will be agricultural and manufactured products produced in areas that support the current administration. Specifically, soybeans, sorghum, hogs, apples, motorcycles, bourbon and so forth but probably not autos (as the Chinese are so deeply embedded in the automotive supply chain), and very unlikely tech products beyond those already in place (for example, even though iPhones are made in China, they are considered imports to the Chinese market and are subject to import duties).

Nevertheless, it’s well to keep in mind that it’s impossible to focus a high degree of damage on a few specific sectors of the economy. The ripple effects from economic damage focused on specific sectors and geographies will impact the economy as a whole. This is primarily what makes a trade war so damaging to all parties. There are no winners in a trade war.