For investors, indirect risks from trade disruptions are often hard to gauge, as they’re not immediately reflected in financial statements. The complexity of global supply chains means that impacts can surface slowly, causing mispricing or delayed volatility. Evaluating risk and leveraging supply chain data are essential for understanding the financial impact of ongoing trade tensions.
It is equally important to look beyond a company’s domicile and understand its broader economic exposure. A firm’s revenue base may span multiple regions, each subject to distinct risks—particularly amid rising trade tensions.
While the U.S. and China have agreed to a temporary tariff suspension, the U.S. has been eyeing higher tariffs on European goods, further escalating trade disputes with the EU. Despite the May 28 decision of U.S. Court of International Trade on the "Liberation Day" tariffs, uncertainty remains high, complicating long-term planning.
FactSet’s GeoRev, Supply Chain Relationships, and RBICS data offer critical insights for navigating global complexities and quantifying a company’s true footprint. GeoRev provides a granular geographic breakdown of revenue, revealing regional exposure beyond what’s typically disclosed in financial statements—essential when segment-level data is limited. This enables investors to pinpoint vulnerabilities to trade disruptions, such as the ongoing U.S.-China tariff conflict.
Complementing this, Supply Chain Relationships data maps direct and multi-tier supplier and customer networks, uncovering potential disruption points that may not be immediately apparent. RBICS, FactSet’s advanced industry classification system, combines top-down market correlation with a bottom-up product-specific approach, enhancing sectoral and sub-sectoral analysis.
Together, these tools equip investors to evaluate exposure to key geographies, supply chain vulnerabilities, and sectoral risks—driving more accurate risk assessments and strategic positioning.
In response to ongoing tariff uncertainty, investors in U.S. equities may look to minimize exposure to companies with significant supply chain or revenue dependencies on regions affected by trade disruptions. However, ensuring companies are truly insulated from these risks is a complex task.
Seemingly unaffected firms may still harbor indirect vulnerabilities, such as reliance on offshore suppliers or customers with indirect ties to impacted regions. While screening for companies with limited direct exposure to China may seem like a straightforward strategy, a more thorough analysis is essential.
Consider Vuzix, a U.S.-based augmented reality (AR) eyewear and smart glasses manufacturer. Despite having minimal direct revenue from China (just 2.1% as estimated by GeoRev), no direct China based customers or suppliers (Table 1 and Table 2 below) and with no mention of China or tariffs in its Q4 2024 earnings call, its multi-tier supply chain—spanning not just direct suppliers but also their upstream partners—remains susceptible to disruptions from the U.S.- tariff tensions with multiple countries.
Tables 1 and 2 below highlight Vuzix's key direct (Tier 1) suppliers and customers. The Supply Chain Relevance Rank refines these results, focusing on the company’s most strategically significant relationships. Relationship Keywords provide additional context, shedding light on aspects such as transaction nature, product or service types, and sectoral roles within the supply chain. RBICS Focus classifies each company's primary business to the most granular sector based on its dominant revenue stream. The results have been further narrowed to emphasize technology companies.
A comprehensive understanding of a company’s entire ecosystem is essential for assessing its resilience to market disruptions. While Tier 1 suppliers directly provide goods to the company, Tier 2 suppliers serve Tier 1, not the target company itself. Geopolitical disruptions, price fluctuations, or regulatory changes often ripple through these layers, affecting not just Tier 1 but also upstream suppliers.
These indirect impacts—such as production delays, cost increases, or compliance risks—can be overlooked in surface-level analysis. For accurate risk analysis, particularly in sectors with complex global supply chains, a detailed review of multi-tier supplier dynamics is essential. Consequently, we identify indirect exposure of Vuzix Corp’s U.S.-based customers to markets in China, Hong Kong, and the European Union—Tier 2 customers (Table 3).
With respect to Vuzix Corp’s supply chain, we will focus on U.S.- based suppliers of components and parts (Texas Instruments Inc.) subject to cross-border tariffs, while narrowing our analysis of Tier 2 suppliers to those located in China (Table 4).
A closer look at Texas Instruments Inc. (TI), a global leader in semiconductor design and manufacturing, reveals its revenue exposure to China at 18.8% and to the EU at 16.5% for FY 2024, as estimated by GeoRev. In its recent earnings call, the company highlighted the challenges posed by tariff uncertainty and the complexities of managing its manufacturing across the U.S., Asia, and Europe. TI imports critical components, including silicon wafers, rare earth elements, and other semiconductor materials from both regions.
Vuzix's reliance on TI as a key supplier introduces potential risks. TI's Digital Light Processing (DLP) Pico display technology powers Vuzix’s M300 and Blade AR smart glasses.
To highlight the significance of uncovering indirect exposure, we further examine Vuzix’s Japanese supplier, Sony Corporation, recognized for its leadership in consumer electronics, entertainment, and technology sectors. While it may appear unaffected by the tariff uncertainty given its country of domicile, GeoRev data reveals a material U.S. customer base (28.8% of revenue). The Q4 2024 earnings call confirmed “disruptions to markets and supply chains by recently adopted US tariffs”.
Sony sources various components from both the EU and China to the U.S., including semiconductors, optical technology, advanced materials, and gaming accessories, as part of its global supply chain. Any disruptions from U.S.-EU or U.S.-China tariffs could impact Sony’s operations, increasing costs or affecting product availability. Supply Chain Relationships data confirms Sony's reliance on Chinese suppliers and customers (Table 5 and Table 6).
Headquartered in Japan, Sony must closely monitor shifts in U.S. tariff policies and adjust its logistics and pricing strategies to navigate the evolving trade landscape, aiming to safeguard its bottom line amid ongoing uncertainties. This aligns with our earlier analysis, which highlights the broader risks and strategic adjustments companies are making in response to tariff volatility.
Extending the analysis, we use GeoRev and Supply Chain Relationships data to identify non-U.S. companies with substantial U.S. revenue exposure (e.g., over 50%) that rely heavily on Chinese suppliers for key materials and components (Table 7).
By integrating GeoRev, Supply Chain Relationships, and RBICS, investors can uncover indirect risks that traditional disclosures often miss, providing a comprehensive view of a company’s global risk profile. This empowers more informed, forward-looking decisions, crucial in today’s market environment. The analysis presented is merely one illustration of how these data insights can be applied; there are a wide range of additional use cases for navigating the complex landscape of risks and uncertainties facing investors today.
This blog post is for informational purposes only. The information contained in this blog post is not legal, tax, or investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.