US Chipmakers Rally on Surprise Surge in China's Industrial Data
A 21.6% jump in Chinese industrial profits and renewed trade hopes spark a relief rally for semiconductor stocks with heavy exposure to the region.
U.S. semiconductor stocks, battered by months of geopolitical friction, surged on Monday following unexpectedly strong economic data from China and renewed optimism for a potential trade deal between Washington and Beijing.
Shares of Micron Technology (MU) led the charge, jumping nearly 6% to $219.02 in morning trading. Other major chipmakers with significant revenue exposure to China also gained, with Qualcomm (QCOM) and Texas Instruments (TXN) posting advances in a broad-based rally for the sector.
The primary catalyst was a report from China's National Bureau of Statistics indicating that industrial profits surged 21.6% in September from a year earlier. The figure marked the largest monthly increase since late 2023, offering a sign of stabilization in the world's second-largest economy and a critical market for electronic components.
The robust data suggests strengthening demand from sectors like electronics and machinery, which are major consumers of the processors and memory chips made by U.S. firms. The rally was further fueled by reports that negotiators were making progress toward a sweeping trade agreement, providing investors a glimmer of hope for de-escalation after a prolonged period of tariff threats and export controls.
Monday's optimism, however, stands in stark contrast to the sector's challenging long-term outlook. Despite the positive session, U.S. chipmakers remain caught in the crossfire of escalating tech tensions. Qualcomm, which derived about 46% of its fiscal 2024 revenue from China, is currently navigating an antitrust investigation by Beijing's market regulators. Similarly, Texas Instruments, which faces a Chinese anti-dumping probe into its analog chips, saw roughly 20% of its revenue come from the country in the first quarter of 2025.
Even Micron, Monday's top performer, has been forced to scale back its Chinese operations. The company recently announced it would exit the China server chip market after failing to recover from an earlier ban, a move expected to reduce its China revenue exposure to around 7% for fiscal year 2025.
These strategic headwinds are compounded by Washington's continued tightening of export controls on advanced semiconductor technology and Beijing's aggressive push for technological self-sufficiency. Analysts note that China is on a determined path to reduce its reliance on foreign chips, a policy that poses a direct threat to the long-term growth prospects of American suppliers.
For now, investors are embracing the positive economic signals. But the fundamental challenges remain, leaving the sector vulnerable to the next shift in the geopolitical landscape. The market will be closely watching for any concrete policy changes to emerge from the trade talks, which will ultimately determine if Monday's rally is the start of a sustained recovery or simply a fleeting response to a rare piece of good news.