Chinese Shares Muted Amid New Tariff Threats

By Jiahui Huang, Kimberley Kao and Sherry Qin

Asian tech hardware stocks got a reprieve after the Trump administration exempted tariffs on some electronics, including Apple's iPhones, but mixed signals from officials saying these tech products will face their own levies kept a lid on optimism.

China's largest chip maker, SMIC, ended 1.7% higher in Hong Kong on Monday and Hua Hong Semiconductor climbed 4.35%. Japanese chip-making equipment manufacturer Tokyo Electron rose 1.35%, while South Korean memory-chip maker Samsung Electronics gained 1.8%. Malaysian semiconductor players Inari Amertron and Unisem (M) rose 7.2% and 2.0%, respectively.

Shares of Apple suppliers listed in Asia also advanced. Taiwan's Largan Precision added 5.2% and Foxconn Technology rose 3.0%. Shenzhen-listed GoerTek increased 1.2%. In Hong Kong, BYD Electronic International and Sunny Optical Technology rose 3.0% and 0.15%, respectively. South Korea's LG Innotek gained 5.8%.

PC makers were higher, too, with Lenovo Group up 3.0% and Quanta Computer jumping 5.8%.

However, shares of TSMC, the world's largest contract chip maker, fell 2.7% in Taiwan, and South Korea's SK Hynix, an Nvidia supplier, edged 0.3% lower.

The broad gains came after a notice from the U.S. Customs and Border Protection posted late Friday said computers, tablets, Apple watches, computer monitors, semiconductor equipment and other electronics were exempt from many tariffs on Chinese products and a 10% tariff on all U.S. imports.

That was despite administration officials later saying that these tech products would soon face separate levies as part of an investigation into semiconductors.

While uncertainty over Trump's tariff regime remains, given several policy flip-flops, analysts largely viewed the latest development as a small positive after a week of tariff chaos that caused financial markets to suffer one of their most tumultuous weeks in years.

"The revisions significantly reduce the value of U.S. imports from emerging Asian economies that are subject to reciprocal tariffs," Barclays analysts said in a note. Nomura estimated that 16.3% of China's exports to the U.S. are now exempt from the reciprocal tariffs.

Apple suppliers stand to be the biggest beneficiaries of the policy exemptions, as China accounts for around 90% of iPhone assembly capacity and 80% for iPads, Citi analysts wrote in a note. The U.S. tech giant was one of the companies hit hardest last week after Trump raised tariffs on Chinese goods to 145%.

The move could give Apple "some breathing room," Wedbush analysts led by Dan Ives wrote in a note. It could also give China space to negotiate, given that "it does not have to automatically start passing massive price increases to U.S. consumers," they said.

Analysts at Nomura said the latest exemption might trigger a significant front-loading of exports for certain products in the weeks and months ahead.

Others said they saw the possibility of other sectors getting a break from Trump tariffs.

"These exemptions will presumably not be the last either," said Paul Ashworth, chief North America economist at Capital Economics. Apple Chief Executive Tim Cook's success in getting its smartphones exempted will likely boost the lobbying by companies in other sectors, he said.

Still, investors are bracing for more twists and turns in Trump's tariff policies in the coming days.

"NOBODY is getting 'off the hook,'" Trump said in one of his most recent posts on the Truth Social platform. "We are taking a look at Semiconductors and the WHOLE ELECTRONICS SUPPLY CHAIN in the upcoming National Security Tariff Investigations."

Write to Jiahui Huang at jiahui.huang@wsj.com, Kimberley Kao at kimberley.kao@wsj.com and Sherry Qin at sherry.qin@wsj.com

By Jiahui Huang, Kimberley Kao and Sherry Qin

Asian tech hardware stocks broadly rose after the Trump administration exempted tariffs on semiconductor equipment, smartphones and other electronics, despite administration officials saying that these tech products would face their own levies.

China's largest chip maker, SMIC, was 0.5% higher in Hong Kong afternoon trading Monday and Hua Hong Semiconductor climbed 3.05%. Japanese chip-making equipment manufacturer Tokyo Electron rose 2.4%, while South Korean memory-chip maker Samsung Electronics gained 1.8%. Malaysian semiconductor players Inari Amertron and Unisem (M), rose 6.6% and 3.0%, respectively.

Shares of Apple suppliers listed in Asia also advanced. Taiwan's Largan Precision was up 5.2%, and Foxconn Technology rose 3.0%. Shenzhen-listed GoerTek added 0.8%. In Hong Kong, BYD Electronic International and Sunny Optical Technology rose 2.3% and 0.2%, respectively. South Korea's LG Innotek gained 6.2%.

PC makers rallied, too, with Lenovo Group increasing 3.4% and Quanta Computer jumping 5.8%.

The gains came after a notice from U.S. Customs and Border Protection posted late Friday said computers, tablets, Apple watches, computer monitors, semiconductor equipment and other electronics were exempt from many tariffs on Chinese products and a 10% tariff on all U.S. imports. That was despite administration officials later saying that these tech products would soon face separate levies as part of an investigation into semiconductors.

Analysts largely viewed the development as a small positive after a week of tariff chaos that caused financial markets to suffer one of their most tumultuous weeks in years.

"The revisions significantly reduce the value of U.S. imports from emerging Asian economies that are subject to reciprocal tariffs," Barclays analysts said in a note. Nomura estimated that 16.3% of China's exports to the U.S. are now exempt from the reciprocal tariffs.

Apple suppliers stand to be the biggest beneficiaries of the policy exemptions, as China accounts for around 90% of iPhone assembly capacity and 80% for iPads, Citi analysts wrote in a note. The U.S. tech giant was one of the companies hit hardest last week after Trump raised tariffs on Chinese goods to 145%.

The move could give Apple "some breathing room," Wedbush analysts led by Dan Ives wrote in a note. It could also give China space to negotiate, given that "it does not have to automatically start passing massive price increases to U.S. consumers," they said.

Analysts at Nomura said the latest exemption might trigger a significant front-loading of exports for certain products in the coming weeks and months.

Some analysts said they saw the possibility of other sectors getting a break from Trump tariffs.

"These exemptions will presumably not be the last either," said Paul Ashworth, chief North America economist at Capital Economics. Apple Chief Executive Tim Cook's success in getting iPhones exempted will likely boost the lobbying by companies in other sectors, he said.

Still, investors are bracing for more twists and turns in Trump's tariff policies in the coming days.

"NOBODY is getting 'off the hook,'" Trump said in a recent post on his Truth Social platform. "We are taking a look at Semiconductors and the WHOLE ELECTRONICS SUPPLY CHAIN in the upcoming National Security Tariff Investigations."

Write to Jiahui Huang at jiahui.huang@wsj.com, Kimberley Kao at kimberley.kao@wsj.com and Sherry Qin at sherry.qin@wsj.com

China's National Development and Reform Commission (NDRC) met with private business leaders Tuesday to discuss ways to support the sector and address concerns about additional US tariffs.

China's top economic planning agency held talks with executives from firms including ride-hailing firm Didi Chuxing, acoustic components maker Goertek and solar power company Trina Solar to gather feedback on economic development and strategies for responding to US trade challenges.

At the meeting, NDRC Chairman Zheng Shanjie told business leaders the commission will improve its regular communication channels with private companies to better understand their concerns and help them overcome obstacles.

The NDRC said the business leaders believe that they are prepared for the additional tariffs imposed by the US.

The Trump administration imposed a 104% tariff on Chinese goods, effective Wednesday. That was after the US president imposed a 34% tariff on Chinese goods imports, bringing the total tariff on China to 54%.

China hit back with a 34% levy on all US imports, effective Thursday, prompting Trump to add more duties on China.

China's Commerce Ministry had said that it will take countermeasures against the US's threat of additional tariffs on Chinese goods.

Several Chinese suppliers of Apple said the impact of the US's reciprocal tariffs will be limited, Yicai Global reported Tuesday.

Luxshare Precision Industry said it will mitigate the impact of market and geopolitical uncertainties with its diverse customer base, global production, and independent innovation, the report said.

Lens Technology said their products are exported through domestic bonded zones, while Lingyi iTech said it has a global capacity layout, therefore making the impact of US tariffs "very limited," the report said.

Zhuhai CosMX Battery said exports of batteries for consumer electronics to the US comprised a small portion of its business, according to Yicai.

Goertek said it is still gauging the impact of the tariffs on the company, Yicai said.

Shares of Goertek fell 4%, CosMX edged down 0.5%, Lens Technology slipped over 3%, while Luxshare's shares fell 2% in recent trading.