Navigating the Semiconductor Storm: Finding Resilient Plays Amid U.S.-China Trade Tensions

The U.S.-China trade war has evolved into a high-stakes game of chess, with semiconductors at the center of the board. From export controls on AI chips to rare earth embargoes, the rules of engagement have reshaped global supply chains—and created opportunities for investors willing to look beyond the noise. Let's dissect which semiconductor stocks are poised to thrive in this fractured landscape, using recent regulatory shifts as a roadmap.

The New Rules of Engagement

The U.S. has weaponized its dominance in semiconductor design tools and advanced chips since 2024, targeting China's AI ambitions with export bans on NVIDIA's H100/H200 and AMD's MI300X series. In retaliation, China restricted exports of rare earth elements critical for chip production, while tightening controls on gallium and germanium. Yet the June 2025 framework agreement—a fragile truce—lifted U.S. bans on EDA software and jet engine exports, buying time for companies to adjust. The takeaway? Resilience hinges on diversification and domestic demand leverage.

Top Plays: Companies Dancing with the Regulatory Storm

1. Applied Materials (AMAT) & Lam Research (LRCX): The CHIPS Act Winners

These equipment giants are the unsung heroes of U.S. reshoring. Both secured over $7.8 billion in CHIPS Act funding to build factories for advanced chip production. Their tools are essential for domestic fabs like Intel's Arizona plant and TSMC's U.S. facilities.

Why buy now? Their backlog is full: Applied Materials' Q2 2025 orders hit a record $8.2 billion, driven by U.S. and Japanese fabs. Lam's EUV lithography systems are irreplaceable for 3nm nodes.

2. TSMC (TSM): The Dual-Sourcing Darling

TSMC's $6.6 billion CHIPS Act-funded Arizona plant isn't just a geopolitical play—it's a revenue engine. By straddling U.S. and Chinese markets, TSMC avoids overexposure to either side's sanctions. Its 2nm node lead and 40% stock surge in 2024-2025 underscore its strategic brilliance.

3. ASML (ASML): The EUV Monopoly

ASML's control over extreme ultraviolet (EUV) lithography—the gold standard for 5nm chips—gives it a moat no trade war can breach. Its stock rose 40% in 2024-2025 as demand from U.S., EU, and South Korean fabs surged. Even China's SMIC relies on ASML's older generation tools, keeping ASML in the game.

4. GlobalFoundries (GFS): The Niche Player with Government Backing

Funded by $1.5 billion in CHIPS Act grants, GlobalFoundries is targeting mature-node chips for automotive and industrial markets—sectors less entangled in AI export bans. Its New York fab's focus on 22nm and 14nm nodes aligns perfectly with non-strategic but high-margin demand.

The Red Flags: Avoid These Traps

• Advanced-node speculation: Overcapacity looms in China's 28nm fabs. Avoid pure-play foundries without U.S. ties.
• Overexposure to China's consumer tech: Companies reliant on smartphone exports to the U.S. face double-digit tariffs.
• EDA tool vendors: Synopsys and Cadence flirted with chaos in 2025's EDA ban scare—stick to hardware plays.

Investment Thesis: Play the Rebalance, Not the Volatility

The U.S.-China truce is fragile, but it buys time for companies to retool. Look for:
1. Equipment makers (AMAT, LRCX, ASML) with CHIPS Act funding.
2. Foundries with dual-sourcing (TSMC, GFS) and mature-node focus.
3. ASEAN-based chipmakers (e.g., ASE, which rose 25% in 2025) leveraging lower costs and geopolitical neutrality.

Avoid chasing AI hype; instead, bet on the infrastructure enabling it. The semiconductor sector's next phase isn't about speed—it's about stability.

Final Call: Buy AMAT, LRCX, and TSM on dips. Monitor ASML's EUV shipments as a leading indicator. Stay wary of stocks without a China-U.S. exit strategy—this storm isn't going anywhere.

The road to resilience is paved with diversification—and a lot of CHIPS.