A temporary pause in US tariffs on electronics imported from China is giving the semiconductor sector a brief reprieve, according to Bank of America, even as the industry braces for new sector-specific trade measures.
The US Customs and Border Protection announced late Friday that smartphones and PCs would be excluded from immediate tariff hikes, which had proposed rates as high as 145%. But President Trump clarified that electronics would instead be included in a separate “sectoral” tariff package on semiconductors, expected in the next one to two months.
“We view the one- to two-month pause as a net positive,” BofA analysts wrote Monday, noting it allows time for discussion on a market that accounts for about half of all chip demand.
Apple Inc (NASDAQ:AAPL, ETR:APC), for example, still assembles most of its iPhones in China, while Dell Technologies Inc (NASDAQ:DELL) and Hewlett Packard Enterprise Co (NYSE:HPE, ETR:2HP) have more diversified production.
The administration’s recent messaging has shifted toward semiconductor self-sufficiency rather than just addressing trade gaps. Though the US doesn’t import chips directly from China, it relies heavily on electronics assembled there with foreign-made semis. BofA said new tariffs could be structured to consider recent US investment pledges from Apple, Nvidia Corp (NASDAQ:NVDA, ETR:NVD), and Taiwan Semiconductor Manufacturing Co (ADR) (NYSE:TSM).
Despite the uncertainty, BofA remains positive on several chip sub-sectors. Top picks include Nvidia and Broadcom Inc (NASDAQ:AVGO, ETR:1YD), design software firms Cadence Design Systems Inc (NASDAQ:CDNS) and Synopsys Inc (NASDAQ:SNPS, ETR:SYP), and chip equipment makers Lam Research Corporation (NASDAQ:LRCX, ETR:LAR) and KLA Corp (NASDAQ:KLAC, ETR:KLA), all seen as well-positioned to weather volatility.
The firm also flagged a May 15 deadline for compliance with new AI diffusion rules, which could restrict chip exports to certain countries.
“We expect the comment period to provide room for negotiations that can hopefully reduce the tariff burden on the chip sector,” the analysts wrote.