On Monday, analyst Ming-Chi Kuo cautioned that President Donald Trump's tariff policy could pose significant near-term risks to semiconductor stocks, highlighting that even Apple Inc.'s (NASDAQ:AAPL) $500 billion U.S. investment couldn’t secure leniency from the administration's aggressive approach.
What Happened: Kuo took to X and expressed concerns about the impact of the Trump administration’s potential semiconductor tariff policies.
"I'm taking a cautious stance on the upcoming semiconductor tariff policy under the Trump administration. Investors should stay alert to the near-term risks surrounding semiconductor stocks," Kuo said.
He indicated that the administration's reliance on tariffs as a tool to bring manufacturing back to the U.S. might lead to challenges for semiconductor companies.
Kuo pointed to Apple as a key case study in this context. Despite its substantial efforts to shift its supply chain away from China during Trump's first term and its $500 billion investment in the U.S., Apple did not escape tariffs.
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"You'd think such efforts would earn some leniency, but they didn't," Kuo explained.
This raised critical questions about the approach to semiconductor tariffs, particularly for non-U.S. companies. "Have non-U.S. semiconductor companies done more than Apple to reduce their reliance on China in recent years?" Kuo asked. "Have they outpaced Apple in U.S. investments? Do these non-U.S. companies have stronger ties to the U.S. government than Apple?"
In response to a comment asking about the long-term trend of U.S. semiconductor manufacturing, Kuo suggested that while the short-term risks were clear, companies that align strategically with the U.S. could benefit in the long run.
"Winners and losers are another big deal. Before that, can see if the semi companies that invested in U.S. earlier can earn some leniency in the upcoming semi tariffs," Kuo added.
Why It Matters: Last week, Trump unveiled a new wave of reciprocal tariffs. The tariff strategy involved country-specific rates, such as 34% on Chinese goods and 32% on imports from Taiwan, alongside a flat 10% tariff on products from other nations.
However, the White House said that some items, like auto parts and steel, which are already facing separate tariffs, as well as energy and mineral resources not domestically available, would be exempt from this new policy.
Semiconductors also fall under the exemption list, but according to Jefferies analysts, that’s likely because Trump is contemplating targeted tariffs for that sector.
While these measures aren’t directly affecting chips just yet, the analysts warned on Friday that they could still lead to rising costs for electronic devices and tech products that rely on semiconductors, thereby dampening overall demand.
Jefferies believes these tariffs will continue to put downward pressure on semiconductor stocks, including Nvidia Corp. (NASDAQ:NVDA), Advanced Micro Devices Inc. (NASDAQ:AMD), and Broadcom Inc. (NASDAQ:AVGO)-- all of which rely heavily on chip manufacturing from Taiwan Semicndctr Mnufctrng Co. Ltd. (NYSE:TSM).
Price Action: On Friday, Nvidia shares fell 7.36%, AMD dropped 8.57%, Broadcom (AVGO) slipped 5.01%, and TSMC declined 6.27%, according to Benzinga Pro data.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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