Semiconductor manufacturers are at the forefront of the technological battle, especially in the context of China’s rapid tech developments. One would have thought President Trump would take it easy on the chipmakers owing to their critical position in the US and global tech infrastructure.
However, investors are now finding out that semi stocks aren’t immune to tariffs, with the latest round of tariffs expected to cost manufacturers around $1 billion. This cost will be incurred through lost sales, increased regulatory compliance, and elevated supply chain costs.
Uncertainty regarding the exact details of the tariffs continues to cause chaos in the market. Chip stocks are sliding as the leading chipmaker, led by Jensen Huang, finds its H20 chips banned from export to China. As the leading chipmaker tries to steer its way out of the crisis, other companies that rely on this giant for business are also trying to figure out what to do.
We decided to take a look at such stocks and see if they offer value. Remember that the H20 chips were made specifically for China, and a ban on selling them is only a temporary headwind, not something that threatens the company’s moat.
To come up with the list of semiconductor stocks worth buying on the China H20 chip sale ban, we considered stocks that are an integral part of the semiconductor supply chain and ranked them by hedge fund interest in their stocks.
10. ASE Technology Holding Co., Ltd. (NYSE:ASX)
Number of Hedge Fund Holders: 17
ASE Technology specializes in semiconductor packaging and testing while also offering electronic manufacturing services. Irrespective of the tariff impact, ASX has a crucial place in the semiconductor supply chain. The company’s job is to ensure chips are of the highest standard, so as long as the broader industry continues making chips, ASX will have enough business.
We have already seen this with the company’s Q1 revenue, which is up 6.5% YoY. March revenues were up 13.1% YoY. This is in contrast to the guidance the company gave in February, suggesting things are not as bad as the market suggests. Even though Q1 margins are expected to remain under pressure, this should also recover in the latter half of the year.
Like many other semiconductor companies, there are concerns over the company’s business with China. However, the management is expected to resolve these issues as it is already in discussion with its business partners as well as the government to determine the best way forward.
9. Amkor Technology, Inc. (NASDAQ:AMKR)
Number of Hedge Fund Holders: 29
Amkor Technology, Inc. is an outsourced semiconductor packaging and test services provider. The company provides flip-chip scale package products, flip-chip stacked chip scale packages, memory products, flip-chip ball grid array packages, and turnkey packaging and test services.
The company’s stock was doing a good job of recovering to the March levels, but the news of H20 chips sales restriction means investors now have to worry about the downtrend continuing. This, however, presents an opportunity for value investors. The company has a highest analyst target price of $36, more than double from current levels.
As per the company’s future outlook announced at the recent earnings call, the revenue growth was expected to be flat to low single-digit. With the help of content recovery in new iOS phones, stronger revenue growth was projected in the second half of the year. With the next earnings report set to come out later this month, investors will need to keep a close eye on how that guidance is affected.
8. Fabrinet (NYSE:FN)
Number of Hedge Fund Holders: 36
The market has been harsh on Fabrinet for many reasons. One look at the one-year chart and you can see the market has struggled to value the stock amid changing economic conditions for the semiconductor industry. There are concerns that the company relies too heavily on the Jensen Huang-led chipmaker, and any diversification on the chipmaking giant’s part could signal doom for Fabrinet.
B. Riley recently upgraded the stock from Sell to Neutral but was quick to mention the risks associated with the stock:
“We still remain concerned about FN’s 800G sales to Nvidia, which could come under pressure as hyperscalers increasingly buy transceivers directly rather than through NVDA. Complicating the outlook is the tariff uncertainty. While the situation remains fluid, the tariff rate for Thailand is currently at 36%.”
While the concerns are valid, investors see the recent interest from Amazon as a sign of safety. Last month, Fabrinet issued a warrant to Amazon allowing the tech giant to buy up to 381,922 shares in the company. Fabrinet is a critical supplier for Amazon, and this warrant is proof that the company’s tech is good enough to survive even if Jensen Huang’s firm diversifies away from the firm.
7. Newmont Corporation (NYSE:NEM)
Number of Hedge Fund Holders: 69
Newmont Corporation is primarily a gold exploration company, but also explores for critical materials like zinc, silver, and copper, among others. Its operations are spread across both North and South America.
The company’s stock is relatively stable because it only supplies critical material to the semiconductor industry, rather than having to adjust to the latest technological requirements like many other suppliers. NEM is therefore a stable alternative to the cyclical industry, providing a decent dividend yield of 1.83%.
The stock not only recovered well from the early April rout but is also closing in on its 52-week high thanks to a surge in gold prices. Due to multiple tailwinds likely to drive the stock price going forward, and limited exposure to the cyclical nature of the semiconductor industry, NEM is part of our list and the least likely to get negatively impacted by the US government’s export restrictions on H20 chips.
6. Applied Materials, Inc. (NASDAQ:AMAT)
Number of Hedge Fund Holders: 80
Applied Materials, Inc. is a manufacturing services, software, and equipment provider to the display, semiconductor, and related industries. It operates in the Display, Applied Global Services, and Semiconductor Systems segments.
At the end of the last month, the company received an upgrade from Jefferies ahead of the upcoming earnings season. Jefferies upgraded AMAT from Hold to Buy with an increased target price of $195 from $185, as a key beneficiary of DRAM and Edge. This upgrade was also based on the March guidance, minimizing China exposure, something that will help the company as the trade war intensifies.
At its previous earnings. AMAT guided for 7% revenue growth for full-year 2025. Expected adjusted EPS growth for the year is 10%, higher than the revenue growth. The company’s sustainable dividend and share buyback programs show its commitment to shareholders. It has also announced a new share buyback program worth $10 billion.
The stock rebounded strongly after the early April market rout but is in hot water again. Trading at near its 52-week lows and 12% below the lowest Wall Street price target of $164, there is no doubt that any further dip can be considered a buying opportunity.
5. Lam Research Corporation (NASDAQ:LRCX)
Number of Hedge Fund Holders: 84
Lam Research Corporation is a manufacturer, refurbisher, service provider, designer, and marketer of semiconductor processing equipment. It provides SABRE electrochemical deposition products, ALTUS systems, and VECTOR plasma-enhanced CVD products.
Analysts at Susquehanna recently upgraded the company from Neutral to Buy with an increased price target of $125 from $75. This upgrade was a result of the introduction of new products and a fresh strategy to expand the firm’s market presence.
Oppenheimer also started coverage of the company last month. The financial services firm assigned an Outperform rating to the company with a target price of $95.
Oppenheimer analysts Edward Yang and Kevin Lee highlighted the company’s growth potential by saying:
“LRCX is currently down ~30%, which we think creates a nice buying opportunity if no recession, as it’s outperformed the S&P 500 in 7 of the last 10 years, 35% over 5 years, and 240% over 10 years, Lam’s hard-to-replicate technology, strong mgmt., and capital stewardship support long-term value.”
According to the 33 different analyst ratings, the company has a highest target price of $125, which means it has a potential upside of 75% from the current levels if the bull scenario proves accurate. Investors, however, may want to wait a little to see how the tariffs-induced dip plays out before taking a position in the stock.
4. ASML Holding N.V. (NASDAQ:ASML)
Number of Hedge Fund Holders: 86
ASML Holding N.V. is a lithography solutions provider for the production, upgrading, development, marketing, servicing, and sales of advanced semiconductor equipment systems. The company provides metrology, inspection, and lithography systems.
The stock is taking a hit after the US government placed restrictions on the export of Jensen Huang-led company’s H20 chips to China. The first quarter bookings also missed estimates, adding to the pessimism surrounding the stock as well as the broader industry.
On the bright side, the 2025 net sales outlook remained unchanged, suggesting the company has a plan to deal with the export restrictions it frequently faces. The total revenue for 2025 is expected to land somewhere between 30 billion euros and 35 billion euros.
This is what the CEO of the company had to say about the ongoing uncertainty:
“There’s this new uncertainty around tariffs. And like many experts, many businesses are explaining this is, of course, something that we don’t know how to quantify yet. But this is adding definitely uncertainty on the long term.”
It is worth noting that the management sees stability in expected revenue despite cautioning that revenue from China will go down moving forward.
3. Freeport-McMoRan Inc (NYSE:FCX)
Number of Hedge Fund Holders: 88
Freeport-McMoRan Inc is a mining company operating in North and South America as well as Indonesia. The company is a major copper supplier to the semiconductor industry.
FCX’s bullish thesis is driven mainly by gold prices, which have been up considerably in the recent past. On top of that, copper demand is set to stay elevated thanks to EVs, 5G, and AI initiatives that will result in increasing demand for semiconductors.
Earlier this month, the company’s CEO, Kathleen Quirk, warned about the negative impact of a recession and trade war. However, she was also quick to point out that the company expects copper sales to improve going forward. Combining this with a potential surge in copper prices means the firm’s earnings could be substantially elevated in the next couple of years, even if tariffs continue to batter the broader semiconductor industry.
2. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 94
Micron Technology, Inc. is a developer, designer, manufacturer, and supplier of storage and memory products. It operates in embedded business unit, compute & networking business unit, storage business unit, and mobile business unit segments.
Earlier this year, Micron became a key supplier for the RTX 50 Blackwell GPUs. There is a realization that memory is a bottleneck for faster data processing, so any improvement in bandwidth will be a positive for the memory makers like Micron. Google just confirmed that its latest hypercomputers will run on its tensor processing units, which are memory-intensive. Micron stock shot up after this news, which confirms how the company is ideally placed to benefit from such developments.
Having said all that, the cyclical nature of the sector and the fear of tariffs and trade war mean the stock has significantly underperformed in the last year, down 41% during that period. There are reasons to believe this will change. The high-bandwidth memory is by far the strongest tailwind for the company. Even though it looks like Donald Trump’s tariffs are negatively impacting the sector, we believe this is a buying opportunity as, sooner or later, Micron will be protected by the same administration owing to its critical position in the semiconductor supply chain.
1. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 186
Taiwan Semiconductor Manufacturing is a well-known global supplier of semiconductor equipment based in Taiwan. The company benefits directly from semiconductor technological innovation, as many companies use its foundry for manufacturing their chips. The stock is taking a hit after news of H20 chip sales restrictions by the US government.
Amid this negativity, there is one positive for the company that investors may have missed. AMD recently announced it will start producing some of its latest chip designs at TSM’s Arizona factory. Bagging such a big client means a lot for the company, especially as it ensures the company can keep its clientele without having to worry about geopolitical issues in Taiwan.
TSM stock has taken a considerable hit since its previous earnings report, but yesterday’s earnings beat has brought back the optimism that has driven most of the sector in the last year. It trades at a PE ratio of 22.32, which is in line with its 5-year average PE of 22.51. The price-to-book is also at the same level as its 5-year average, so there is hardly any discount available. However, as the tariff uncertainty continues and the stock dips further with the broader market, it is one worth having on the watchlist in case the opportunity presents itself.
While we acknowledge the potential of TSM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than TSM but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
