Semiconductor Sector Faces Regulatory Uncertainty as Court Ruling and Export Controls Collide

A U.S. appeals court has overturned Trump-era tariffs in a landmark decision, yet semiconductor manufacturers like Texas Instruments find little relief as the Commerce Department simultaneously tightens restrictions on foreign chip producers operating in China. These conflicting regulatory developments create fresh uncertainty for an industry already navigating complex global supply chains.

Suspended Judgment Creates Market Instability

On Friday, a federal appeals court delivered a significant ruling, declaring substantial portions of former President Trump’s “Liberation Day” tariffs unlawful. The court found the presidential administration had overstepped its emergency authority in implementing these measures. However, in an unexpected twist, the court suspended enforcement of its decision until October 14th, providing the current administration ample time to appeal to the Supreme Court.

This legal limbo introduces substantial uncertainty for semiconductor firms dependent on stable international trade frameworks. Texas Instruments and its peers now face weeks of regulatory ambiguity that could impact supply chain planning and operational costs. Previous analysis by McKinsey had already highlighted the significant risks U.S. tariff policies pose to the semiconductor sector’s global operations.

Dual Regulatory Pressures Emerge

Simultaneously with the court’s tariff decision, the Commerce Department implemented stricter controls on foreign semiconductor operations in China. The department revoked special authorizations previously granted to companies including Samsung and SK Hynix for their Chinese facilities. Moving forward, these firms will require specific licenses for their operations within China, with new construction projects and technology upgrades no longer receiving automatic approval.

These measures extend beyond directly affected companies, potentially impacting American equipment suppliers and creating disruptions throughout the semiconductor value chain. The combined effect of these regulatory actions presents complex challenges for industry participants with global manufacturing footprints.

Should investors sell immediately? Or is it worth buying Texas Instruments?

Texas Instruments Navigates Challenging Landscape

Amid these regulatory crosscurrents, Texas Instruments continues executing its substantial domestic manufacturing strategy. The company is investing over $60 billion across seven new U.S. fabrication facilities, supported by approximately $1.6 billion in direct funding from the CHIPS Act. By 2030, the semiconductor manufacturer aims to control more than 95% of its production internally.

Recent quarterly results demonstrate the strength of this approach, with earnings of $1.41 per share on revenue of $4.45 billion significantly exceeding market expectations. The company has also maintained disciplined capital return practices, distributing $5.7 billion to shareholders through various mechanisms during 2024.

Despite these strong fundamentals, questions remain about whether the company’s operational excellence can offset broader regulatory challenges. The stock closed Friday with modest losses at €173.10, while technical indicators including an RSI reading of 73.8 suggest potentially overbought conditions.

The coming weeks leading to the Supreme Court’s potential review will test whether Texas Instruments’ substantial domestic investments can provide sufficient insulation from escalating global trade tensions.