Trump’s policies not bad for all semiconductor companies
The first market to react to a major news is the stock market. A day after the results of the US Presidential election were announced, some semiconductor stocks fell, but some rose.
In this series, we’ve already discussed how Donald Trump’s election as US President was not welcomed by many technology stocks such as Apple (AAPL) and Qualcomm (QCOM), which depend largely on China for their growth. But the news was welcomed by semiconductor stocks with high exposure to the industrial market.
Notably, the stock of the world’s largest industrial semiconductor company, Texas Instruments (TXN), has risen 2% since the election results were announced, while Analog Devices (ADI) stock has risen 5%.
Trump’s policies support industrialization
Trump looks to bring production back to the US in order to create more industrial jobs. The global economic slowdown resulted in a decline in industrial revenue from the semiconductor companies. Trump’s taxation policies would provide subsidies to American companies that manufacture in the country and charge additional taxes to companies manufacturing overseas.
This would mean an increase in capital spending in the industrial market, thereby increasing demand for Texas Instruments’ and Analog Devices’ products.
Analog Devices’ earnings
Analog Devices is also a supplier for Apple, and so an increase in orders from the industrial segment would be partially offset by a decline from the consumer segment. But ADI is increasing its exposure to the industrial and communications infrastructure segments by acquiring Linear Technology (LLTC), and this would reduce its exposure in Apple and enable ADI to leverage the industrial growth.
From another perspective, if Trump succeeds in finding fair trade terms with China and South Korea, it would act as a catalyst for Qualcomm, Apple, and Applied Materials.