A temporary delay in new U.S. tariffs on tech imports from China sparked a broad semiconductor rally.
What Happened: The iShares Semiconductor ETF (NASDAQ:SOXX) jumped 2.5% by 9:40 a.m. ET Monday, extending its rally to 19% from last week's lows.
Monday’s top individual gainers within the SOXX ETF included:
- Entegris Inc. (NASDAQ:ENTG) surged 6.7% to $74.37
- Intel Corp. (NASDAQ:INTC) rose 6.1% to $20.95
- Micron Technology Inc. (NASDAQ:MU) gained 5.8% to $73.56
- Qorvo Inc. (NASDAQ:QRVO) added 5.1% to $59.16
- MKS Instruments Inc. (NASDAQ:MKSI) climbed 4.2% to $68.25
- Universal Display Corp. (NASDAQ:OLED) rose 3.8% to $117.02
- Texas Instruments Inc. (NASDAQ:TXN) advanced 3.7% to $153.01
In a research note published on Monday, Bank of America analyst Vivek Arya called the one-to-two-month delay on electronics tariffs “incrementally positive.” The delay, which allows industry debate before the White House finalizes so-called “sectoral” tariffs targeting semiconductors, was enough to trigger sharp gains in chip stocks.
Sentiment also improved following the U.S. Customs and Border Protection's decision Friday to exclude several electronic categories—such as smartphones and PCs—from immediate reciprocal tariffs.
"The delay is a net positive," Arya said, citing how electronics represent roughly 50% of global chip demand.
"It allows for debate and discussion on this critical end-market,” he added.
Arya noted that Apple Inc. (NASDAQ:AAPL), the world's largest semiconductor buyer, was also excluded from tariff pressure during Trump’s first term.
Arya reaffirmed a bullish stance on chipmakers with exposure to artificial intelligence and reshoring themes, including Nvidia Corp. (NASDAQ:NVDA) and Broadcom Inc. (NASDAQ:AVGO).
Cadence Design Systems Inc. (NASDAQ:CDNS) and Synopsys Inc. (NASDAQ:SNPS) remain his key preferences among chip-design software firms.
For semiconductor capital equipment—a group seen as direct beneficiaries of U.S. manufacturing—Arya highlighted Lam Research Corp. (NASDAQ:LRCX) and KLA Corp. (NASDAQ:KLAC).
The analyst also noted a potential tailwind from increased domestic production efforts. Taiwan Semiconductor Manufacturing Co. (NYSE:TSM)’s $195 billion U.S. investments, Apple's $500 billion pledge and Nvidia's $200 billion U.S. expansion could all influence the shaping of final tariff rules.
"We expect over time for TSMC to front-end process most—if not all—semis required by its U.S. fabless customers within its Arizona fabs," Arya said, adding that a potential Intel-TSMC joint venture could further boost domestic chip output.
See Also: Apple’s Margins Catch A Break, But Road Ahead Still Looks Bumpy
Why It Matters: Despite Monday's rally, Arya maintained a cautious view on chipmakers heavily exposed to consumer-facing segments like smartphones and PCs.
After all, President Donald Trump clarified Sunday that electronics aren’t fully exempt. They will instead be folded into a separate sector-focused tariff plan to be announced in the coming months.
Therefore, it’s unclear how sectoral tariffs will apply to U.S. electronics assembled in China using foreign-made chips.
"Semis remain a high beta sector and exposed to volatility," Arya said. However, he expects companies tied to AI and infrastructure to remain well-positioned to deliver on earnings expectations.
One risk Arya flagged is the upcoming May 15 compliance deadline for new U.S. rules governing the export of AI chips, which could limit shipments outside a small group of 19 “Tier 1” nations.
Still, with the delay in electronics tariffs offering space for negotiation, investors appear to be betting that the worst-case trade scenarios for U.S. chipmakers could be avoided, at least for now.
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