(Bloomberg) -- Intel Corp. and Globalfoundries Inc. rallied Wednesday, defying a broad selloff among chip companies, as investors speculated the two could benefit from fresh policies under either a Biden or Trump administration.
Shares in Intel rose as much as 8.2% and Globalfoundries added 14%. The Philadelphia Semiconductor Index, meanwhile, sank 4%, with all but five of its 30 components lower on the day.
The Biden administration has told allies that it’s considering using the most severe trade restrictions available if companies such as Tokyo Electron and ASML continue giving China access to advanced semiconductor technology. The US is also weighing additional sanctions on specific Chinese chip companies linked to Huawei Technologies Co.
Meanwhile, the Republican presidential nominee Donald Trump also seemed cool on the idea of protecting Taiwan from Chinese aggression. Asked about America’s commitment to defending Taiwan from China, which views the Asian democracy as a breakaway province, Trump makes it clear that, despite recent bipartisan support for Taiwan, he’s at best lukewarm about standing up to Chinese aggression. Part of his skepticism is grounded in economic resentment.
“Taiwan took our chip business from us,” he said in an interview with Bloomberg Businessweek. What he wants is for Taiwan to pay the US for protection. “I don’t think we’re any different from an insurance policy. Why? Why are we doing this?” he asks.
“Intel is the beneficiary of the comments Trump made about Taiwan,” said Robert Pavlik, Senior Portfolio Manager at Dakota Wealth Management. “If Taiwan potentially has to pay for its protection, does that mean China can move in on Taiwan? Intel does have manufacturing capabilities in the US, so it would be the beneficiary.”
Polls show a very tight race between Trump and President Joe Biden. While the elections are still a few months off, Trump could win in November, and many Democratic leaders are increasingly concerned he’ll deliver Republicans control of the House and Senate along with the White House.
Most American semiconductor companies are heavily reliant on business with China. Stocks like Nvidia Corp., ARM Holdings and Broadcom Inc. — which have surged this year on chip demand as businesses race to build their artificial intelligence platforms and products — slipped in early trading on Wednesday.
“The chip crackdown by the Biden administration is spurring some profit taking,” said Pavlik. “Some chip companies have had a strong run, very strong gains, and there’s a lack of buying interest given that news.”
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