Trade wars are always destructive. The current escalation in the chip wars will be no different. The Biden administration banned the use of equipment from China’s Huawei and ZTE over alleged national security concerns. Semiconductor stocks like Nvidia (NASDAQ:NVDA) were prohibited from selling their high-end chips to China.

Now Beijing is retaliating. It is barring the country’s telecommunications companies from using chips from American chipmakers. Although China’s domestic chips aren’t always as good as those made in the U.S., China’s largest telecoms China Mobile and China Telecom must now choose from a list of local suppliers.

A number of U.S. semiconductor stocks rely heavily upon Chinese companies for a large part of their revenue. The prohibitions put their sales growth at risk. For example, NVDA says it is unsure how the government’s ban on selling chips to China will affect revenue or for how long. The market represents 20% of its data center segment sales, its fastest growing business.

Below are two semiconductor stocks that will see the business sharply cut by China’s tit-for-tat response. Also, one chip company should still benefit from the ban.

Chip stock to sell: Advanced Micro Devices (AMD)

The first semiconductor stock investors should be worried about is Advanced Micro Devices (NASDAQ:AMD). Although it has been generating a lot of buzz about the new line of high-powered artificial intelligence (AI) chips it recently introduced, China is a critical end market for the chipmaker.

In AMD’s fourth-quarter filing, sales to China totaled more than $3.4 billion, or 15% of total annual revenue of $22.7 billion. While that’s down from the $5.2 billion, or 22% of sales it represented the year before, that’s only because the Biden administration prevented it, like Nvidia, from selling its high-end chips there.

Also, Beijing is discouraging government agencies from buying computers with AMD chips installed. Any products containing them need to get a security evaluation. None have received one yet. If they do go through the process, a top criteria determines how much design, development and production occurs in China, according to The Financial Times.

Even though AMD’s reliance upon China is declining, it is not a voluntarily drop. And, it will soon get worse. Investors may want to look elsewhere for a chipmaker to buy.

Intel (INTC)

In an even worse position than AMD is rival Intel (NASDAQ:INTC), which generated 27% of its revenue from China last year. The chipmaker said $3.2 billion, or 6% of total revenue last year, was dependent upon U.S. export control authorizations. It expects that figure to grow substantially in the coming years.

China is Intel’s largest market, even larger than the U.S. sales to China totaling $14.85 billion last year, 6% more than the $13.96 billion it generated here at home. Sales fell steadily since 2021 when it produced almost $23 billion from China. Also, like AMD, it’s due to pressure from the Biden administration’s controls.

Additionally, Intel is obviously heavily embedded in the PC market and will find the restrictions on use of “Intel inside” computers in China particularly burdensome. The Wall Street Journal cites data from industry analysts at TrendForce noting Intel owns the server CPU market with a 71% share for 2024 (AMD will own 23%). Last October, China Telecom purchased 4,000 AI servers, 53% of which had Intel chips in them. All of that is about to come undone.

Chip stock to buy: Arm Holdings (ARM)

No one is able to escape the export controls to China, not even British chipmaker Arm Holdings (NASDAQ:ARM). However, because ARM has a joint venture, Arm China, it is still able to grow its business there. It is one semiconductor stock to buy.

China represents 20% of ARM’s global business, yet it also faced export controls when Britain followed Washington’s lead in prohibiting certain technology exports. In 2022, it was unable to sell some of its Neoverse V advanced chip designs to Alibaba (NYSE:BABA) due to the restrictions because their performance was too high.

Yet, Arm Holdings is still able to navigate its way through choppy waters. In its fiscal third quarter ending Dec. 31, the chip designer’s sales to China rose 7.9% to $206 million. Arm China represents almost a quarter of Arm’s revenue.

Arm Holdings maintains that it is in compliance with all regulations. Last November, Arm Holdings Chief Financial Officer (CFO) Jason Child told Yahoo Finance Live, “And we think we’re well-positioned to continue to be able to participate through — with the growth of China through our relationship with our joint venture with ARM China.”

As one chip company still growing its business in China as well as elsewhere, Arm Holdings is the semiconductor stock to buy.

On the date of publication, Rich Duprey did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.