The U.S. semiconductor tariff investigation is approaching its deadline, causing concern in the industry and leading to the emergence of hedging strategies in the bond market.

The U.S. Department of Commerce's investigation into the national security implications of imported semiconductors will conclude on May 7, with little public feedback, causing industry concerns over potential tariff policies. The Trump administration's tariff policies have already led to market fluctuations, especially impacting the semiconductor supply chain. Experts advise investors to shift to investment-grade corporate bonds for hedging, as the safe-haven status of U.S. Treasury bonds is under scrutiny.

U.S. Department of Commerce Initiates Section 232 Investigation, Semiconductor Industry Remains Silent

The U.S. Department of Commerce's Bureau of Industry and Security (BIS) launched a national security investigation on April 16 under Section 232 of the Trade Expansion Act of 1962, focusing on imported semiconductors and their manufacturing equipment. A 21-day public comment period is open until May 7. The investigation covers 14 core issues, including foreign subsidies, supply chain dependency risks, and bottlenecks in domestic U.S. production capacity, encompassing both traditional and advanced chips, microelectronic components, and downstream products containing semiconductors.

However, as of now, the Department of Commerce has received only 10 responses, far fewer than the hundreds of feedback submissions on past tariff issues like lumber and copper. Industry insiders suggest this silence may be due to apprehension about the Trump administration's stance, fearing that public opposition could lead to political risks, resulting in a "chilling effect."

Trump's Tariff Policy Sparks Market Turmoil

Since President Trump announced large-scale reciprocal tariffs on April 2, global markets have experienced significant volatility. The S&P 500 index fell more than 12% within a week, marking one of the largest declines since the 2008 financial crisis. Although Trump announced a 90-day tariff suspension for non-retaliatory countries on April 9, market sentiment has not fully recovered.

The semiconductor industry is particularly affected. TSMC noted that if the U.S. imposes tariffs on imported semiconductors and related products, it will lead to increased costs, affecting demand for its products and services. To mitigate potential impacts of these tariffs, TSMC has accelerated its investment plans in the U.S., with a total amount expected to reach $165 billion, covering six wafer fabs, two advanced packaging plants, and one R&D center.

Pressure Mounts to Restructure Global Semiconductor Supply Chain

Facing tariff and geopolitical risks, tech companies are actively adjusting their supply chains. Quanta Chairman Barry Lam stated that the company has nine plants worldwide, providing significant flexibility to diversify risks. Foxconn is also continuing to promote production base diversification to reduce reliance on a single region.

IC design companies like MediaTek and Realtek have indicated that although no significant order adjustments have been observed yet, customers have started accelerating procurement to prepare for potential future tariff increases. Companies are also evaluating shifting manufacturing to regions less affected by tariffs.

Traditional Safe Haven Asset U.S. Treasury Bonds Under Challenge

Historically, U.S. Treasury bonds have been considered the world's safest haven asset. However, amid the market turmoil triggered by Trump's tariff policies, Treasury prices have fallen instead of rising. The yield on 10-year Treasuries surged from 4.01% in early April to 4.49%, marking the largest weekly increase since the 9/11 attacks in 2001, indicating heightened market concerns about U.S. inflation and fiscal deficits.

While major creditor nations like China and Japan have not engaged in large-scale sell-offs, foreign interest in U.S. Treasuries has noticeably weakened. There are also reports that the U.S. government may implement debt swaps and tax measures on foreign investors, further undermining the credibility of U.S. Treasuries as a global safe asset.

Experts Advise Shifting to Investment-Grade Corporate Bonds for Hedging

With the effectiveness of Treasuries as a hedge being questioned, experts suggest investors consider allocating to investment-grade corporate bonds. Cathay Securities Investment Trust notes that investment-grade bonds offer both defensive and yield advantages, especially as the Federal Reserve's rate-cutting cycle is not yet over, providing potential capital gain opportunities.

As of the end of March, the yield on U.S. BBB-rated corporate bonds reached 5.35%, higher than the five-year average of 4.32%. In contrast, non-investment-grade bonds, due to higher credit risk, have performed poorly during market volatility. Experts recommend that investors focus on "income generation" as the main strategy, seeking low-volatility, high-yield asset allocation strategies.

References

• 美課半導體關稅 公眾意見「異常冷清」 恐讓川普一意孤行 | 今晨必讀 | 要聞 | 經濟日報
• 全球化自由貿易已死 AI巨頭輝達、台積電挑戰加劇
• 「避險」的搜尋結果 - 工商時報
• 美債還能信嗎？專家曝「收息心法」給定心丸！
• 「美債」的搜尋結果 - 工商時報
• Stocks unleash remarkable comeback after a historic dive from Trump's tariffs announcement
• Taiwan says it has concluded first ‘substantive’ tariff talks with US - BusinessWorld Online