Chinese Tech Giants Face Profit Squeeze Amid US Tariffs and AI Pivot

Tencent, JD.com, and Hon Hai Precision Industry confront mounting pressure as new US tariffs erode earnings. President Trump's April tariff announcement—including a proposed 100% levy on Chinese-made chips—has forced these firms to recalibrate financial strategies, potentially curtailing stock buybacks to fund AI investments.

Hon Hai, Nvidia's key manufacturing partner, reported slowing July sales growth but retains long-term Optimism through US data center investments. Tencent anticipates just 7.3% net income growth in its upcoming report, marking its weakest expansion pace. The tariffs compound existing challenges in consumer electronics, where demand for smartphones and PCs remains tepid.

While US-China relations show tentative improvement, semiconductor trade barriers continue clouding profitability forecasts. These Chinese tech leaders now operate at a structural disadvantage against global rivals, with tariff exposure constraining both immediate margins and strategic flexibility.