Trump-Xi talks threaten semiconductor rally as investors weigh rare earths, chip equipment trade-off

Semiconductor stocks face potential geopolitical pressure as U.S. President Donald Trump and Chinese President Xi Jinping prepare to meet in China on May 14-15, 2026, Barron’s reported, citing Gavekal Research concerns that a U.S.-China bargain could alter chip-sector pricing power. Gavekal Chief Executive Louis-Vincent Gave said markets are watching whether Washington and Beijing could exchange access to rare earths for advanced semiconductor equipment. The U.S. needs to rebuild rare earth inventories, while China seeks more access to high-end chipmaking tools, including ASML’s advanced lithography systems, which remain subject to U.S.-backed export restrictions. Gave warned that any “rare earths for ASML lithography” deal could expand China’s advanced manufacturing capacity and pressure prices for major chipmakers including TSMC, Samsung Electronics and SK Hynix. He also cited the Iran war as a risk to energy prices, inflation, central bank rate-cut expectations and Middle East data center investments. The Philadelphia Semiconductor Index recently posted its strongest 25-day gain since the 2000 dot-com bubble, led in part by Intel and Micron.