Why Intel, TSMC, and AMD stocks soared all at once

After a rocky start to the year, semiconductor stocks are seeing a big turnaround on Monday.

In the first week of 2024, some of the world’s most famous semiconductor companies – Taiwan semiconductor manufacturing company (TSM 2.67%), intel (INTC 3.83%)and Advanced Micro Devices (AMD 5.87%) –Decrease following the Santa Claus rally in December.

However, as the stock market began to gain footing in the second week, the stocks of these three companies turned from falling to rising. As of 12:05 p.m. ET, TSMC stock was up 2.9%, Intel stock was up 3.4%, and AMD was the best performer, up 5.1%.

Perhaps we can thank President Joe Biden.

Bad news for China is good news for everyone else.

You’ve probably already heard about the Biden administration’s plans to restrict China’s access to some of the most advanced chips available to support artificial intelligence capabilities. That section of the market is dominated by Nvidia (NVDA 5.07%)The company is most affected by export restrictions on these types of chips. Other companies are largely unaffected.

but, wall street journal On Monday morning, we reported that the Biden administration is now turning its attention to less advanced, older generations of computer chips used in industries other than AI, such as consumer electronics, military weapons, and automobiles. This type of semiconductor chip is more likely to be produced in China and exported from China than to be imported into China. surely, WSJ The article highlights that China is completely dominant in this sector of the semiconductor industry and that President Biden wants to do something about it.

Meanwhile, concerned that China would use its advantage in low-end chips to punish the United States in a future trade war, Congress has ordered the Department of Commerce and the Office of the United States Trade Representative (USTR) to It calls for measures to be taken to protect the supply chain. On the one hand, it would provide subsidies to expand domestic semiconductor production, and on the other hand, it would impose tariffs on chips imported from China.

What this means for Intel, Taiwan Semi, and AMD

Although this initiative is still in its early stages, it is already WSJ The Department of Commerce notes it has awarded $162 million in grants to help. microchip technology The company will expand production of microcontrollers for automobiles and home appliances. The Commerce Department is also said to be compiling a list of other U.S. companies that could receive government assistance to compete with China’s rapidly growing low-end chip manufacturing industry.

Don’t get too excited yet. Shares of Intel, Taiwan Semi, and AMD all rose on Monday’s news that one of these companies will eventually receive subsidies aimed directly at supporting production of low-end chips. There are no guarantees.Conversely, semiconductor companies marvel, texas instruments, and Microchip are the ones that immediately come to mind when you think of low-end chips. And all of these stocks were up on Monday as well.

That said, if you want to bet on any of the big-name chipmakers mentioned above based on this latest effort to subsidize domestic chip production, Taiwan Semiconductor looks like the safest bet. It trades at less than 16 times forward earnings, significantly cheaper than Intel at 26 times forward earnings, and less than half the price of AMD at 37 times forward earnings. TSMC also trades at a lower valuation than Marvell, TI, and Microchip.

Strange as it may be, if the U.S. semiconductor chip trade war continues, Taiwanese semiconductors could be the biggest beneficiary.