In the past, it seemed easy to profit from China's growth by investing in well-known companies like Alibaba. But over the past year, many of China's top stocks have been crushed by regulatory pressure from both Chinese and American regulators.

China has been reining in its top tech companies with antitrust probes, fines for unapproved acquisitions, a new data protection law, and tighter restrictions for the e-commerce, education, and online gaming industries. Meanwhile, the U.S. plans to delist shares of Chinese companies that don't comply with new auditing rules within the next three years.

All that pressure makes it tough to recommend buying any Chinese stocks. However, shrewd investors can still gain some relatively safe exposure to China through American tech companies that do significant business there. Here are two tech stocks that should profit from China's growth -- while remaining fairly well-insulated from the regulatory and geopolitical headwinds.

A person uses a tablet at Victoria Harbor in Hong Kong.

Image source: Getty Images.

Texas Instruments

Texas Instruments (NASDAQ:TXN) is an integrated device manufacturer that designs, manufactures, and sells its own chips. It doesn't rely on third-party foundries because its analog and embedded chips are simpler and less capital-intensive to produce than higher-end chips.

Manufacturing all of its chips in-house prevents TI from getting caught in the traffic jam at third-party foundries like TSMC (NYSE:TSM) amid the global chip shortage, and insulates it from the escalating tech war between China and the U.S. over the production of higher-end chips.

However, TI's analog and embedded chips are still widely used in mobile devices, consumer electronics, communication infrastructure hardware, industrial machines, and cars. It generated about 20% of its revenue from China last year, and two of its 17 plants are located in mainland China.

TI admits that trade tensions and China's development of its own domestic chips could threaten its long-term growth, but it's largely avoided the crossfire that forced other chipmakers like Micron and Skyworks to cut ties with Huawei. TI briefly suspended its shipments to Huawei two years ago, but resumed those sales because many of its products weren't actually affected by the trade blacklist.

TI's revenue rose less than 1% last year as the pandemic disrupted the auto and industrial markets, but its earnings per share still rose 14% as it cut costs and repurchased more shares. This year, analysts expect its revenue and earnings to grow 24% and 36%, respectively, as the pandemic passes and it benefits from easier year-over-year comparisons.

AMD

AMD's (NASDAQ:AMD) revenue from China rose 34% year-over-year to $2.3 billion last year and accounted for 24% of its top line.

AMD has maintained a fairly positive relationship with the Chinese government. It previously ran a joint venture in China which licensed some of its x86 chip designs to Chinese chipmakers, but the business was disrupted by the Trump Administration's trade blacklist two years ago. Recent rumors suggest the Chinese government will also approve AMD's planned takeover of Xilinx (NASDAQ:XLNX) -- which is surprising, since China has a reputation for blocking or postponing big U.S. tech mergers.

Unlike its rival Intel (NASDAQ:INTC), which is an integrated device manufacturer like TI, AMD is a "fabless" chipmaker that outsources the production of its CPUs and GPUs to third-party foundries like TSMC and Samsung. AMD's transition to that model, which started after it spun off its foundry unit as GlobalFoundries over a decade ago, enabled it to stay ahead of Intel in the "process race" to create smaller and more advanced chips.

AMD's near-term supplies will likely be affected by the chip shortage, but its core businesses remain strong. Its revenue surged 45% in 2020 -- driven by robust demand for its Ryzen CPUs, Epyc server CPUs, Radeon GPUs, and APUs for gaming consoles -- as its adjusted EPS jumped 102%.

This year, analysts expect AMD's revenue and adjusted earnings to rise 60% and 93%, respectively, as it continues to benefit from Intel's sluggish turnaround in the CPU market while keeping pace with Nvidia in the high-end GPU market. Strong sales of the PS5 and Xbox Series S/X consoles -- which all run on AMD's custom APUs -- should complement that growth.

Another road to China

Texas Instruments and AMD are already rock-solid semiconductor stocks. But when we examine their exposure to China and their ability to quietly navigate the tech war without tripping any alarms, we'll notice that both companies also offer investors indirect ways to profit from China's growth.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.