Semiconductors and Tech Stocks May Be at Risk If Trade War Broadens
Investors in technology shares are concerned that the industry could be the next victim of the Trump administration’s increasingly combative stance toward global trade partners, according to Bloomberg.
While Donald Trump’s broadsides this week against what he deemed unfair trade practices focused on industrial metals, comments he made over the past couple of months about the tech industry indicate it could soon come in for targeting as well. In January, Trump said the U.S. was considering a fine on China because it had forced U.S. companies to share their intellectual property as a cost of doing business there.
Then in his first State of the Union address, Trump pledged “strong enforcement” of U.S. rules that protect business secrets. Those warnings are now sounding more ominous to investors concerned about a trade war between the world’s two biggest economies.
If Trump does decide to crack down on intellectual property theft, U.S.-based semiconductor companies that have Chinese customers or factories in China could get caught in the crossfire. China is the largest market for the chip industry and if it were to retaliate some U.S. companies may suffer.
One sector high-flier with significant China exposure, Nvidia, had been up 25 percent year-to-date. It sold off as much as 5.7 percent on Thursday after Trump made his steel tariff comments, and has dropped as far as 4.5 percent Friday before recovering. The move over the two days is worse than the broader market selloff of about 2 percent, reflecting the concern about a Trump tech crackdown.