U.S. Semiconductor Stocks Higher Amid Trade Investigation

U.S. semiconductor stocks mostly gained in premarket trading on Tuesday following the Biden administration’s new trade investigation into Chinese-made legacy semiconductors.

The probe, initiated under Section 301 of the Trade Act of 1974, may lead to additional tariffs on older Chinese chips used in everyday products, such as automobiles, washing machines, and telecom equipment.

Semiconductor companies including Broadcom (NASDAQ:AVGO), AMD (NASDAQ:AMD), and Marvell (NASDAQ:MRVL) saw increases of approximately 1.8%, 1.8%, and 0.4%, respectively. ETFs tracking the sector, like SOXX and SMH, rose by 0.3% and 0.2%. Micron (NASDAQ:MU) reported a modest gain of 0.1%, while Nvidia (NASDAQ:NVDA) and Taiwan Semiconductor experienced slight declines of 0.3% and 0.8%.

The investigation aims to protect U.S. semiconductor producers against China’s state-driven expansion, which has allowed Chinese firms to sell chips at artificially low prices. U.S. Trade Representative Katherine Tai stated that the probe would promote fair market competition and prevent China from dominating the global semiconductor market.

While the investigation will be completed under President-elect Donald Trump’s administration, the Biden administration's move may lead to new tariffs on Chinese semiconductors, adding to the existing 50% tariff on these products scheduled for January 1.

Reuters reported that China’s commerce ministry expressed concerns regarding potential disruptions to global chip supply chains.