Trump Threatens 100% Semiconductor Tariff—Why Chip Stocks Are Still Rising
Key Takeaways
- Chip stocks advanced Thursday after President Donald Trump said companies that commit to manufacturing in the U.S. will be exempt from 100% tariffs on imported semiconductors.
- Trump’s announcement was light on details about how the tariffs and exemptions would work, but analysts expect clarity within the next week.
- Wall Street analysts were optimistic that the vast majority of chip designers and manufacturers would win exemptions from manufacturing commitments or by contracting with U.S.-based foundries.
Chip stocks rose on Thursday, the day after President Donald Trump said companies that manufacture in the U.S. or have committed to doing so will be exempt from 100% semiconductor tariffs.
“We’ll be putting a tariff of approximately 100% on chips and semiconductors. But if you’re building in the United States of America, there’s no charge,” Trump said during a White House press conference Wednesday afternoon. The tariffs were disclosed alongside Apple (AAPL) CEO Tim Cook, who appeared with Trump to announce plans to invest $100 billion in U.S. manufacturing, on top of the $500 billion committed earlier this year.
President Trump’s off-the-cuff announcement was light on details. For example, it was unclear whether existing commitments to manufacture in America would be sufficient, or if the president wants chipmakers to make new investments to win an exemption. It also remains unclear whether the tariffs and exemptions apply to electronics that contain semiconductors, or just the chips themselves, according to Jefferies analysts.
“We await full details likely in the next week or so before jumping to any conclusions, as it has always been a bad move to extrapolate too much from Trump’s words or social media post[s],” said Angelo Zino, senior vice president and equity analyst at CFRA Research.
Nonetheless, investors seemed to think Wednesday’s announcement removed a significant overhang for semiconductor stocks. The PHLX Semiconductor Index (SOX) was up 1.2% in recent trading. AI chip giants Nvidia (NVDA) and Broadcom (AVGO) were recently both up about 0.5%, though down from their earlier highs, while competitor Advanced Micro Devices (AMD) jumped 5%. Contract chip manufacturer Taiwan Semiconductor Manufacturing Co. (TSM) also advanced 5%, and manufacturing equipment maker Applied Materials (AMAT) rose more than 2%.
Which Chipmakers Will Be Affected?
“From a high level, the 100% headline number seems intimidating, but in practice we expect a much lower impact,” wrote Bank of America Securities analysts in a note on Wednesday.
U.S.-based companies with domestic manufacturing capacity, such as Intel (INTC), Micron (MU), and Texas Instruments (TXN), should not be affected by the tariffs, according to Citigroup analysts. And fabless chip designers, including giants Nvidia, AMD, Broadcom, and Qualcomm (QCOM), should also be able to avoid the tariffs by contracting with major foundries like TSMC, Samsung, and GlobalFoundries (GFS), all of which have U.S. manufacturing facilities.
“If Taiwan Semi does get a full exemption … it would bode well for the broader tech semiconductor/hardware ecosystem and our positive stance on the space,” Zino of CFRA said.
Even European semiconductor companies without a U.S. presence are expected to be spared the 100% levy. The EU-U.S. trade deal announced late last month capped semiconductor tariffs at 15% and guaranteed zero-for-zero tariffs for semiconductor equipment makers like Netherlands-based ASML (ASML). European Commission spokesperson Olof Gill on Thursday reportedly said the Trump administration had guaranteed that the 15% cap established by the trade deal would not be overwritten by other tariffs.