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AMD, Nvidia: Chipmakers rallying after Trump, Xi trade truce

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  • Chipmakers rallied Monday after the US and China
    reached a 90-day trade truce over the weekend.
  • Trump agreed to postpone new tariffs on Chinese imports
    and Xi said China would purchase “a not yet agreed upon, but
    very substantial” amount of US goods and label Fentanyl a
    controlled substance.
  • If an agreement isn’t reached by 90 days, the current
    10% tariffs on $200 billion Chinese imports will jump to 25%,
    the White House said. 
  • The meeting offered hope for a resolution of trade
    disputes, especially for the semiconductor industry that relies
    heavily on the manufacturing steps in multiple geographic
    regions, an analyst said.

Chipmakers are rallying Monday as investors welcome the
tentative truce on the trade war
between the US and China.

In a meeting at the G20 summit in Buenos Aires, Argentina,
on Saturday, 
President Donald Trump agreed to
postpone new tariffs on Chinese imports by three months and
Chinese President Xi Jinping said China would purchase
a
not yet agreed upon, but very substantial
” amount of US
agriculture, energy, and industrial products, according to a
White House statement.

Negotiations have a 90-day window to discuss details
on non-tariff barriers such as intellectual property
protection, cyber threat, and forced technology transfer. If an
agreement isn’t reached by the end of the period, current 10%
tariffs on $200 billion Chinese imports will jump to 25%, the
White House said. 

“President Xi also stated that he is open to approving the
previously unapproved Qualcomm-NXP deal should it again be
presented to him,” the White House added.

While the meeting didn’t mean the trade war has come to an
end, the agreement offered hope for a resolution of trade
disputes, especially for the semiconductor industry that relies
heavily on the manufacturing steps in multiple geographic
regions, according to William Stein, an analyst at SunTrust
Robinson Humphrey. 

“This Statement is not a formal agreement, but the tone and
direction seems very constructive for semis,” said Stein in a
note out on Monday.

He continued: “Companies have recently pointed to
tariffs (and trade more generally) as the primary reason for a
recent slowdown in demand. We expected the Trump/Xi meeting at
the G20 would be the next catalyst, and the White House Press
Statement is clearly constructive.” 

Stein added that he is “surprised” to see Xi’s positive message
on the deal between Qualcomm and NXP
Semiconductors, but he still worries about the longer-term
situation for chipmakers given that the current 10% tariffs
have already hurt demand and the result of the discussion on
non-tariff barriers remains unclear.

As a result, chipmakers are ripping higher ahead of Monday’s
opening bell. Here’s the scoreboard as of 8:47 A.M. ET:

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