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Home » Technology » The Winners Of US-China Truce Are The Chipmakers

The Winners Of US-China Truce Are The Chipmakers

Al Restar by Al Restar
July 1, 2019
in Technology
2 min read
41
0
The Winners Of US-China Truce Are The Chipmakers

Photo: Jakub T. Jankiewicz | Flickr | CC BY-SA 2.0

Chipmakers lead the stock market rally, Monday, as President Donald Trump and China’s Xi Jinping agreed to suspend the trade war and renew the trade talks between the two economic superpowers during the end of their bilateral meeting at the G–20 Summit in Tokyo, Friday.

The VanEck Vectors Semiconductor ETF, which includes the top S&P 500 chipmakers, rose 3.8% in trading. Some technology hardware companies soared individually after President Trump announced the reprieve for Huawei, with Skyworks climbing 7.5%, Western Digital up 4.4%, Micron up 6.6%, Qualcomm up 3.3%, Broadcom up 5.7% and AMD and Nvidia each rising over 4%.

Huawei has been the center of a U.S. smear campaign as the then-intensifying trade war was on its peak. The White House has repeatedly announced that Huawei is being used by the Chinese government as a trojan horse to infiltrate U.S. systems to aid in espionage and economic sabotage efforts of Xi and his government. In a controversial decision in May, Trump placed a ban against Huawei and ordered American companies to halt selling American-made products to the Chinese smartphone manufacturer.

But following the G-20 summit, Trump changed tune as China and the US entered into a truce and with the US President announcing that American companies can resume selling products to Chinese companies.

“U.S. companies can sell their equipment to Huawei. We’re talking about equipment where there’s no great national security problem with it. I said that’s O.K., that we will keep selling that product, these are American companies that make these products,” Donald Trump said after his meeting with the Chinese president. “That’s very complex, by the way. I’ve agreed to allow them to continue to sell that product so that American companies will continue.”

And analysts believe that this move greatly benefits American suppliers. “We believe the truce sets up improving visibility, a rebound in orders and upside to depressed expectations for the Huawei-exposed semi suppliers in [the second half of 2019,]” Mizuho Securities analyst Vijay Rakesh wrote in a note to investors where the analyst upgraded shares of Western Digital.

Al Restar

Al Restar

An idealist straight from business school who works as a content marketer, digital branding consultant, and graphic designer. Outside work, he spends his time taking care of his cacti and painting watercolors.

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