What Happened?
A number of stocks jumped in the afternoon session after reports revealed the Trump administration was considering a new plan to bolster domestic chip manufacturing and reduce reliance on overseas producers.
According to The Wall Street Journal, the White House was exploring a policy that would require U.S. chip companies to maintain a 1-to-1 ratio between semiconductors manufactured domestically and those imported. Companies that fail to meet this target could face significant tariffs. This initiative aims to reshape global supply chains and spur investment in American manufacturing facilities. The news was received favorably by the market, signaling investor optimism that such a plan could translate into increased domestic production and revenue for U.S.-based semiconductor firms.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Semiconductor Manufacturing company Amtech (NASDAQ: ASYS) jumped 3.2%. Is now the time to buy Amtech? Access our full analysis report here, it’s free.
- Analog Semiconductors company MACOM (NASDAQ: MTSI) jumped 3.5%. Is now the time to buy MACOM? Access our full analysis report here, it’s free.
Zooming In On MACOM (MTSI)
MACOM’s shares are quite volatile and have had 19 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 months ago as stocks pulled back (Nasdaq -1.5%, S&P 500 -1.5%) amid fresh concerns about trade tariffs.
The pullback followed comments from President Trump clarifying the scope of his administration's 25% tariffs on Venezuela. He noted that it would apply to any country that does business with Venezuela. For example, 25% is on top of the already-in-place 20% tariff on China because China imports oil from Venezuela, which could translate to a 45% tariff on some Chinese goods. This announcement could significantly raise the operating costs for affected companies and institutions.
Adding to the market unease, the President announced plans for new tariffs on auto imports before the planned "reciprocal" tariffs on April 2, 2025. There were also reports that the U.S. had added more Chinese companies to its trade blacklist, citing national security concerns.
As a result, these companies would now need government approval to purchase American technology. Among those affected were tech firms that depended heavily on advanced chips made by U.S. manufacturers, raising concerns about the US chip makers' ability to maintain strong sales in the Chinese market.
MACOM is down 0% since the beginning of the year, and at $129.39 per share, it is trading 13% below its 52-week high of $148.78 from January 2025. Investors who bought $1,000 worth of MACOM’s shares 5 years ago would now be looking at an investment worth $3,910.
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