The Trump administration reportedly is considering a plan to mandate an equal ratio of domestically manufactured semiconductors to imported chips. Intel stock rose on the news because the U.S.-based chipmaker would be a beneficiary of the policy.
The Wall Street Journal reported Friday that the policy would require chipmakers to manufacture the same number of semiconductors in the U.S. as their customers import from overseas producers. Companies that don't maintain a 1-to-1 ratio over time would have to pay a tariff.
President Donald Trump is looking for ways to spur domestic chip manufacturing, the report said.
Intel stock rose 4.4% to close at 35.50 on the stock market today. Other U.S. chipmakers moving on the news included GlobalFoundries, Micron Technology and Texas Instruments. GlobalFoundries stock surged 8.4% to 35.59. Micron advanced a fraction to 157.27. TI climbed 1.4% to 184.55.
Meanwhile, the Philadelphia semiconductor index, known as SOX, rose 0.3% for the day. The SOX includes the 30 largest semiconductor stocks traded in the U.S.
Intel stock has rallied since Trump took an interest in helping the beleaguered chipmaker.
On Aug. 22, Intel announced that the U.S. government would make an $8.9 billion investment in Intel in exchange for a 9.9% stake in the company.
Last week, artificial intelligence chip leader Nvidia announced that is investing $5 billion in Intel stock and is partnering with the company to develop custom data center and PC products.
Proposed Trump Policy Questioned
Trump last month said tech companies that invest in U.S. manufacturing could avoid tariffs. Consumer electronics giant Apple won a tariff exemption with its pledge to invest an additional $100 billion in U.S. manufacturing, bringing its total to $600 billion over the next four years.
Trump's move to promote parity in domestic and international chip production is a further step to reshore semiconductor manufacturing. But it is complicated by the nature of entrenched global supply chains, which involve semiconductor packaging firms and electronics manufacturers.
"We struggle to understand how such a policy would work, particularly given for the most part semiconductors are imported within systems," Wedbush Securities analyst Matt Bryson said in a client note.
He added, "As such, this tariff setup would seemingly put the onus on (the) system manufacturer to understand how many parts their suppliers plan to manufacture in the U.S., not to mention tracking semiconductor origins for components and subcomponents that typically wouldn't have point of origins attached with ICs (integrated circuits) numbering in the double, if not perhaps even triple digits, for a typical notebook PC."
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