U.S. tech stocks surged higher in pre-market trading Monday after President Donald Trump said he would ease export restrictions on U.S. companies doing business with China's Huawei Technologies following his weekend meeting with Xi Jinping at the G20 summit in Osaka.
Trump said Huawei, the world's biggest maker of both smartphones and 5G network equipment, would be able to purchase products from U.S. companies "which will not impact our national security". National Economic Council chairman Larry Kudlow called the changed in tact a "loosening up" of restrictions but not a "general amnesty". Kudlow, a key White House advisor, told media on Sunday that Huawei would remain on the U.S.'s 'Entity List' of blacklisted companies, owing to concerns for its links to the Chinese military, where it has been placed since May 15.
"U.S. companies can sell their equipment to Huawei. I'm talking about equipment where there is no great national emergency problem with it," Trump said. "Huawei is a complicated situation. We agreed to leave that - we're leaving Huawei toward the end. We're going to see. We'll see where we go with the trade agreement."
Micron Technologies (MU - Get Report) , a Boise, Idaho-based chipmaker that said last week it had resumed some of its shipments to Huawei after studying the Commerce Department restrictions, was marked 6.6% higher at the start of trading Monday to change hands at $4.19 per share. Rival chipmaker Qualcomm (QCOM - Get Report) , which gets around 5% of its revenues from selling products to Huawei, was seen 3.4% higher at $78.67 each while Nividia Corp. (NVDA - Get Report) shares were marked 4.35% higher at $171.38 each.
Apple Inc. (AAPL - Get Report) was another notable early gainer, rising 3.2% to $204.23 each, as investors bet the trade detente between Washington and Beijing, and Trump's move to ease restrictions on Huawei, would reduce the chances of reprisal tariffs on the iPhone maker in China, where it generates around 20% of its revenues and sources important components of its supply chain.
Tech stocks in Europe were also on the move in early Monday trading, with the sector leading gains for the benchmark Stoxx 600 index, as both Apple suppliers and key Huawei customers notched solid post-G20 gains.
Infineon Technologies (IFNNY) , Europe's biggest chipmaker, was marked 4.9% higher at €16.31 each in Frankfurt, while semiconductor rival STMicroelectronics NV (STM - Get Report) was seen 5.8% higher in Amsterdam at €16.50.Trump's decision to include Huawei in the U.S.-China trade talks, however, was met with criticism at home and suggests the fragile truce between Washington and Beijing could be undone by U.S. lawmakers who remain concerned for the national security risks that they still see in the China-backed tech group.
If President Trump has in fact bargained away the recent restrictions on #Huawei, then we will have to get those restrictions put back in place through legislation.
And it will pass with a large veto proof majority.— Marco Rubio (@marcorubio) June 29, 2019
Democratic Senator Chuck Schumer, meanwhile called Huawei "one of few potent levers we have to make China play fair on trade", and argued that "If President (Trump) backs off, as it appears he is doing, it will dramatically undercut our ability to change China's unfair trades practices."