Semiconductor stocks will be exposed to big changes as President Trump steps into office once again. His policies are expected to reshape the big picture for semiconductor stocks like Nvidia, AMD, Taiwan Semiconductor (TSMC), and Intel.
With tariffs expected to be in motion soon and a focus on domestic manufacturing, how well these stocks can navigate regulations, economic conditions and geopolitical tension will ultimately determine their performance under the new administration.
Tariffs on Imported Chips
President Trump has intended to impose tariffs on imported semiconductors, especially from Taiwan. This move aims to focus on domestic chip manufacturing but could have major impacts on companies that rely heavily on imported production.
TSMC, the world’s largest contract manufacturer of semiconductors, is at the center of this geopolitical landscape. Trump’s administration has criticized TSMC for its role in the U.S.-China trade tensions and has floated the idea of imposing tariffs on Taiwanese chips.
Nvidia relies mostly on TSMC to produce advanced AI chips. Tariffs could increase production costs, potentially impacting company profits. Nvidia experienced a major drop in its stock price due to market reactions to Trump’s tariff threats, which could further reduce investor confidence in the company’s growth. ⁽¹⁾
AMD could also be impacted by rising costs associated with tariffs on chips imported from Taiwan, potentially leading to higher prices for consumers and reduced competitiveness in the market. ⁽²⁾
CHIPS Act
The CHIPS Act, aimed at boosting U.S. semiconductor manufacturing through subsidies and incentives, faces uncertainty under the Trump administration. Trump has criticized the Act’s cost and suggested potential rollbacks, favoring tariffs instead to encourage domestic production. ⁽³⁾
These policy changes could deter future investments and impact major players like Taiwan Semiconductor Manufacturing Company (TSMC), which has been promised $6.6 billion under the Act to develop cutting-edge fabrication plants in Arizona.
TSMC first announced its Arizona investment in 2020, with its total commitment now exceeding $65 billion for three planned facilities.
After facing production delays, the first plant began chip production in Q4 2024, while the second facility is under construction and set to be operational by 2028. The CHIPS Act, signed in 2022 with a $53 billion allocation, was originally intended to counter China’s influence and secure the U.S. supply chain. However, there are concerns that a Republican-led House could reassess its provisions.
Despite Trump’s opposition to the Act, industry experts believe it will largely remain intact due to bipartisan support in Washington.
Meanwhile, the semiconductor industry continues to thrive, with TSMC reporting record Q4 2024 profits driven by strong AI chip demand. This positive performance has bolstered investor confidence, pushing TSMC’s stock up nearly 4% following the earnings report. ⁽⁴⁾
Intel’s Opportunity to Shine
Despite the troubles that Nvidia and AMD have been facing, Intel may find opportunities with Trump’s tariff policies.
Intel has struggled in the CPU market, losing ground to AMD and facing weaker demand for its GPUs due to the shift toward AI accelerators. However, its upcoming Lunar Lake and Arrow Lake chips, built using TSMC’s advanced 3nm process, could help Intel compete more effectively with AMD. ⁽⁵⁾
The recovery of the PC market and increased CPU spending from data centers could also boost Intel’s revenues in 2024. Additionally, Intel’s latest server chips, Sierra Forest and Granite Rapids, built on its 3nm “Intel 3” process node, are expected to perform better against AMD. The company’s strong Q4 revenue guidance suggests that these positive trends could soon take effect. ⁽⁶⁾
The Trump administration’s focus on strengthening U.S. manufacturing could benefit Intel due to its significant domestic fabrication operations. Potential tariffs on foreign chipmakers and incentives for U.S. production might push more business toward Intel, particularly for its foundry services.
Given the importance of semiconductors to national security, Intel’s role as the only American company designing and fabricating leading-edge logic chips in the U.S. could make it a preferred partner for government contracts. If Trump continues prioritizing military and technological independence, Intel may secure additional government-backed projects, further strengthening its position. ⁽⁷⁾
Market News and Future Outlook
On Monday, semiconductor stocks experienced a significant sell-off, mainly triggered by concerns over competition from China’s new AI assistant, DeepSeek.
Major chipmakers like Nvidia and Broadcom saw their stock prices plummet by approximately 17%, leading to a broader decline in the semiconductor sector. The next day, semiconductor stocks began to rebound as investors shifted their focus towards upcoming earnings reports from major tech companies. ⁽⁸⁾
ASML, a leading supplier of semiconductor equipment, also exceeded analyst expectations with Q4 earnings, reporting revenue of 9.06 billion euros, which was higher than expected. The company attributes this success to booming AI-driven demand and forecasts that AI-related chips could represent over 40% of the $1 trillion semiconductor market by 2030. ⁽⁹⁾
The outlook for semiconductor stocks remains strong, driven by rising demand for AI, high-performance computing, and advanced chip manufacturing. Government incentives, such as the CHIPS Act, continue to support domestic production, though geopolitical tensions and emerging low-cost AI models could pose risks. Overall, the sector may be set for long-term growth, with innovation and AI adoption both serving as key factors for the sector.