Premarket trading Tuesday, U.S. semiconductor stocks mostly edged higher after the Biden administration launched a new trade investigation into Chinese-made legacy semiconductors.
The probe, under Section 301 of the Trade Act of 1974, could result in higher tariffs on older Chinese chips used in everyday products including automobiles, washing machines and telecom gear.
Semiconductor companies like Broadcom (NASDAQ: AMD (NASDAQ: AMD) , AVGO), and Marvell (NASDAQ: MRVL) Technology gained around 1.8%, 1.8%, and 0.4%, respectively. Meanwhile, ETFs that track the sector, including the SOXX and SMH, rose 0.3% and 0.2%. Micron (NASDAQ: Meanwhile, Nvidia (NASDAQ: NVDA) and Taiwan Semiconductor (NYSE: TSM) also saw modest declines of 0.3% and 0.8%, while MU) also posted a modest gain of 0.1%.
The aim of the investigation is to protect U.S. semiconductor producers from China’s state driven expansion of its chip industry, which has allowed Chinese companies to sell chips at artificially lower prices.
The probe would protect U.S. market competition and make sure China doesn’t dominate the global semiconductor market, U.S. Trade Representative Katherine Tai said.
The investigation will be closed under President-elect Donald Trump’s administration, but the Biden administration’s decision to continue now could mean new tariffs on Chinese semiconductors.
The tariffs would pile on the 50% tariff on Chinese chips set to go into effect on January 1.
China’s commerce ministry said in a statement that the probe raises concern regarding potential disruptions to global chip supply chains, according to Reuters.
Premarket trading Tuesday, U.S. semiconductor stocks mostly rose after the Biden administration launched a new trade investigation into Chinese made legacy semiconductors. That probe could also trigger further tariffs on older Chinese chips used in everything from automobiles to washing machines to telecom gear.
Semiconductor companies like Broadcom (NASDAQ: AVGO (NVDA), AMD (NASDAQ: AMD) and Marvell (NASDAQ: MRVL) Technology posted gains of 1.8 percent. Meanwhile, ETFs tracking the sector, like the SOXX and SMH, climbed 0.3% and 0.2%.Taiwan Semiconductor (NYSE: TSM) also moved down by 0.8%, while NVidia (NASDAQ: NVDA) and MU) both gained by 0.1% and 0.3%, respectively.MRVL) Technology. Meanwhile, ETFs that track the sector, including the SOXX and SMH, rose 0.3% and 0.2%. Micron (NASDAQ: NVidia (NASDAQ: NVDA) and Taiwan Semiconductor both fell slightly, by 0.3% and 0.8%, respectively; MU) also posted a modest gain of 0.1%.
The probe is aimed at the U.S. semiconductor producers from China’s state driven expansion of its chip industry, which has allowed Chinese companies to sell chips at artificially low prices. The probe would shield U.S. market competition and guarantee that China doesn’t dominate the global semiconductor market, U.S. Trade Representative Katherine Tai said.
President-elect Donald Trump’s administration will complete the investigation, but the decision by the Biden administration to begin now could result in new tariffs on Chinese semiconductors. Its 50 percent tariff on Chinese chips, which will kick in on January 1, would be stacked on top of that. Reuters also quoted China’s commerce ministry as saying the probe was also concerned about how disruptions to global chip supply chains could be caused.