What could Trump’s latest tariffs round mean for chipmakers? Bernstein weighs in

Based on this fictional text, here is what the latest round of tariffs could mean for the semiconductor industry, according to the analysis by Bernstein.

Executive Summary

In this fictional scenario, President Trump’s new, broad-based tariffs create significant uncertainty and a direct threat to the semiconductor industry. According to Bernstein’s analysis, chipmakers face a double-barreled risk: tariffs on the electronic devices their chips go into, which would reduce final demand, and potential tariffs on the chip components themselves, which would increase costs and disrupt supply chains. While the threat is serious and expected to materialize “within weeks,” Bernstein has adopted a “wait-and-see” approach, making no immediate changes to its stock ratings.

The Two Core Threats to Chipmakers

Bernstein analysts highlight that the White House is expected to roll out tariffs specifically targeting the semiconductor industry in two potential ways:

1. Tariffs on “Relevant End Devices”

• What it means: This refers to placing duties on finished electronic products that are imported into the U.S., such as laptops, smartphones, servers, and other consumer electronics.

• The Impact: This is an indirect but powerful threat. If tariffs make these devices more expensive for American consumers and businesses, demand for them would likely fall. A decline in PC, phone, or server sales directly translates into lower orders for the chips that power them, hurting the revenue of companies like Intel (INTC), AMD (AMD), and Qualcomm (QCOM).

2. Tariffs on “Component-Level” Imports

• What it means: This refers to placing duties directly on the semiconductor chips themselves or on the raw materials and components needed to manufacture, test, and package them.

• The Impact: This is a direct threat to profitability and operations. The semiconductor supply chain is incredibly complex and global. A U.S.-based chip designer or manufacturer often relies on components and services from countries across Asia and Europe. Tariffs on these components would raise the cost of production, squeezing profit margins. This could force companies to either absorb the costs (hurting profits) or pass them on to customers (risking lower sales).

Bernstein’s Market Perspective and Stock Ratings

Despite anticipating news on these tariffs “within weeks,” Bernstein made no changes to their estimates, price targets, or ratings for the chip stocks they cover.

• Why no changes? This suggests that Bernstein believes the risk is not yet fully certain or that it is already partially reflected in their current valuations. They are likely in a “wait-and-see” mode, pending the final details of the tariff plan. As the note states, the market “has clearly been getting trained to mostly ignore Trump’s tariff pronouncements,” but this time “feels” more concrete.

• A Divided View on the Sector: Bernstein’s ratings show a clear split in their outlook, which is notable against this backdrop of tariff risk.

  • Rated “Outperform”: Nvidia (NVDA), Broadcom (AVGO), Qualcomm (QCOM), and equipment makers Applied Materials (AMAT) and Lam Research (LRCX). This suggests Bernstein believes these companies have stronger business models, better pricing power, or are driven by secular growth trends (like AI for Nvidia) that make them more resilient to these specific trade headwinds.

  • Rated “Market Perform”: Intel (INTC), AMD (AMD), Analog Devices (ADI), NXP Semiconductors (NXPI), and Texas Instruments (TXN). This neutral rating suggests these companies are seen as more vulnerable or having less upside in the current environment, with the tariff threat acting as another potential headwind.

The Question on Intel (INTC)

The text asks: “INTC: is this perennial leader facing new challenges?”

Based on this fictional scenario, the answer is a definitive yes. The proposed tariffs represent a significant new challenge on top of its existing competitive pressures. A neutral “Market Perform” rating from Bernstein underscores the view that the company would likely struggle to outperform the market under these conditions.

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