The looming escalation of U.S.-China trade tensions threatens to reshape the global semiconductor landscape in 2025 despite a 23.2% year-over-year increase in global semiconductor sales to $166 billion in the third quarter of 2024. As President-elect Donald Trump pledges to impose substantial tariffs of up to 60% on Chinese imports and an additional 10% tariff on Inauguration Day, the semiconductor industry participants — Qualcomm QCOM, Advanced Micro Devices AMD, Intel INTC, Micron Technology MU and ASML Holding ASML — brace for significant disruption. Goldman Sachs indicates a 90% probability of Trump implementing these sweeping tariffs, while a Reuters survey of 50 economists suggests that duties of 40% could be in place by early 2025.
The situation appears more precarious than the 2018 trade war, as China has enacted new laws allowing it to blacklist foreign companies, impose retaliatory sanctions and restrict access to crucial supply chains. Beijing's recent ban on exporting certain rare minerals to the United States signals an increasingly confrontational stance. With China controlling over 70% of critical raw materials essential for semiconductor production, including natural graphite and rare-earth compounds, the industry faces significant vulnerabilities.
The Peterson Institute for International Economics warns that escalating tensions could trigger higher U.S. inflation and a decline in GDP, with technology firms bearing the brunt of market declines. Barclays strategists estimate that proposed tariffs and retaliatory actions could drag S&P 500 earnings down by 2.8%, with technology and manufacturing sectors particularly vulnerable.
As both nations appear poised for a more disruptive trade conflict than before, here's how five major semiconductor companies stand exposed.
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Qualcomm: Mobile Market Dependencies
Qualcomm's significant exposure to the Chinese smartphone market presents acute risks. The company's licensing business model, heavily dependent on Chinese manufacturers paying royalties for wireless technology patents, could face renewed pressure. Rising competition from domestic Chinese players like HiSilicon, coupled with potential trade restrictions, threatens both Qualcomm's chip sales and intellectual property revenue streams. This Zacks Rank #2 (Buy) company's dominant position in mobile processors could become a liability if Chinese customers seek domestic alternatives. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for the company’s fiscal 2025 earnings has moved north by 0.3% to $11.14 per share over the past 30 days.
AMD: Growth Trajectory Under Threat
AMD faces significant exposure through its expanding data center business and artificial intelligence initiatives. This Zacks Rank #3 (Hold) company's recent market share gains could be jeopardized by stricter export controls on advanced chips to Chinese customers. With China representing a crucial growth market for AMD's data center and AI accelerator products, expanded trade restrictions could substantially impact revenue projections. The company's position in the high-performance computing segment makes it particularly vulnerable to any disruption in Chinese market access.
The Zacks Consensus Estimate for AMD’s 2024 earnings has remained steady at $3.31 per share over the past 30 days.
Intel Corporation: Double-Edged Challenge
Intel's unique position as a chip designer and manufacturer creates compound risks. The company's ambitious foundry expansion plans face potential complications from increased restrictions on semiconductor manufacturing equipment sales to China. Additionally, Intel's efforts to regain data center market share could be hampered if Chinese customers accelerate their transition to domestic alternatives. This Zacks Rank #3 company's strategy to compete with TSMC in manufacturing could face setbacks if trade tensions limit access to Chinese customers or supply chains.
The Zacks Consensus Estimate for the company’s 2024 earnings has remained steady at a loss of 9 cents per share over the past 30 days.
Micron Technology: Memory Market Vulnerabilities
As a leading memory chip manufacturer, Micron appears particularly exposed to Chinese retaliation. This Zacks Rank #3 company has already faced restrictions on its products in certain Chinese security-related applications, and its substantial reliance on Chinese demand for DRAM and NAND flash memory makes it especially vulnerable to market access limitations. Recent Chinese government actions suggest memory chips could become a focal point in trade disputes, putting Micron's revenue streams at risk.
The Zacks Consensus Estimate for MU’s fiscal 2025 earnings has moved south by 20.8% to $6.86 per share over the past 30 days.
ASML: Critical Equipment Provider at Crossroads
As the world's leading manufacturer of semiconductor lithography equipment, this Zacks Rank #4 (Sell) faces unique challenges in navigating U.S.-China tensions. While not directly impacted by tariffs, the company's ability to sell advanced chipmaking equipment to Chinese customers could be further restricted under expanded export controls. ASML's position as a crucial supplier to both U.S. and Chinese semiconductor manufacturers places it at the center of growing geopolitical tensions, potentially forcing difficult choices between competing markets.
The Zacks Consensus Estimate for ASML’s 2024 earnings has moved south by 0.5% to $20.57 per share over the past 30 days.
Conclusion
In 2025, these semiconductor companies must navigate an increasingly complex landscape where business decisions are increasingly influenced by geopolitical considerations. Success will likely depend on their ability to diversify supply chains, maintain technological leadership and adapt to a potentially more fragmented global semiconductor ecosystem. Barclays’ analysis suggests that retaliatory measures could particularly impact industries with thin profit margins, making semiconductor companies with significant Chinese exposure especially vulnerable.
The ripple effects of these trade tensions extend beyond direct China exposure, potentially impacting these companies' global competitiveness and innovation capabilities. As Chinese customers increasingly turn to domestic alternatives, semiconductor firms may need to accelerate their technology development and find new growth markets to offset potential losses in what has historically been one of their largest markets.
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