Nvidia And Other Chip-Stock Linked ETFs Surge Amid Potential Easing Of US Restrictions On China

Global chip stocks and ETFs experienced a notable surge following reports that U.S. officials are contemplating easing restrictions on sales to China. This development could lead to significant changes in the semiconductor industry as early as next week.

What Happened: Shares of global chip companies rose on Thursday after reports surfaced that U.S. officials might ease restrictions on sales to China. The potential changes could be announced as early as next week.

As per Benzinga Pro, Chip ETFs reacted positively as well: Direxion Daily Semiconductor Bull 3X Shares (NYSE:SOXL), which holds over 8% in Advanced Micro Devices (NASDAQ:AMD), Broadcom Limited (NASDAQ:AVGO), Nvidia (NASDAQ:NVDA), rose 2.67%, iShares Semiconductor ETF (NASDAQ:SOXX) increased by 1.03%, and VanEck Semiconductor ETF (NASDAQ:SMH) climbed 0.90%.

The deliberations have involved U.S. officials, allies in Japan and the Netherlands, and American chip equipment manufacturers. These manufacturers have lobbied against stricter measures, warning of severe impacts on their businesses. The latest proposal differs from earlier versions, particularly regarding which Chinese companies might be added to a trade restriction list.

Previously, the U.S. considered sanctioning six suppliers to Huawei Technologies Co., a key player in China’s tech sector. However, the current plan may only include some of these suppliers, notably excluding ChangXin Memory Technologies Inc., which is developing AI memory chip technology.

See Also: Bitcoin, Ethereum, Dogecoin Surge As Traders Raise Risk Appetite Ahead Of Thanksgiving: Analyst Sets Mid-Term Price Target For ETH At $6K

Why It Matters: The potential easing of U.S. restrictions on China comes amid a backdrop of complex geopolitical tensions and trade policies. Recently, Peter Thiel highlighted the severe impact a proposed 60% tariff on Chinese goods could have on Beijing, suggesting a shift in manufacturing away from China. Additionally, Taiwan Semiconductor faces challenges due to geopolitical tensions, with China focusing on enhancing its local chip production capabilities.

Furthermore, Nvidia and Intel suppliers are reevaluating their manufacturing strategies in Mexico due to potential tariffs. These developments underscore the intricate dynamics at play in the semiconductor industry and the global supply chain.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

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