Investing.com - Micron (NASDAQ:MU) jumped Monday amid a broad-based rally in chip stocks as sentiment in the sector received boost after the U.S. and China agreed to not escalate their ongoing trade war.
Micron Technology (NASDAQ:MU), Qorvo (NASDAQ:QRVO) and Qualcomm (NASDAQ:QCOM) were set to end the day higher.
The Philadelphia Semiconductor Index was up 2.3% Monday afternoon after rising nearly 5% soon after the open. Just about all of the components in the index were higher, except Intel (NASDAQ:INTC), which was flat to lower.
Top performers in the index were Taiwan Semiconductor Manufacturing (NYSE:TSM) and Inphi Corporation (NYSE:IPHI), both up more than 5%.
Traders had feared that escalating trade tensions would weigh on economic growth in China, one of the world’s biggest spenders on chip equipment.
President Donald Trump also pledged to ease restrictions on Huawei, a key customer for some of the largest U.S. companies like Intel (NASDAQ:INTC) and Broadcom (NASDAQ:AVGO).
In June, Broadcom Inc (NASDAQ:AVGO) blamed a disappointing quarter on slowing demand, particularly in China, where its largest clients like Huawei have suffered from U.S. export restrictions. Broadcom shares were up more than 3%.
“We believe the truce sets up improving visibility, a rebound in orders and upside to depressed expectations for the Huawei-exposed semi suppliers in (the second half of 2019),” Mizuho Securities said.
Semiconductor investors will have to wait for “a more permanent resolution to the trade tariffs and more confidence in the supply chain,” which would drive the sector higher in 2020.
Trade friction aside, however, the industry has also suffered from lower demand for smartphones, denting the growth of component suppliers.
Smartphone vendors shipped a total of 310.8 million smartphones worldwide in first quarter of the year, down 6.6% from the 332.7 million units in 2018, according to market-research firm IDC.
Huawei has "downgraded its forecast for total smartphone shipments in the second half of 2019 by about 20% to 30% from the previous estimate," according to a report in the Nikkei Asian Review that cited "a source familiar with Huawei smartphone orders."
Smartphone vendors shipped a total of 310.8 million smartphones worldwide in Q1 2019, down 6.6% from the 332.7 million units in Q1 2018, according to market-research firm IDC.
Of the top five, only Huawei and Vivo shipped more units than the year before.