New York

Investors in technology shares are concerned that the industry could be the next victim of the Trump administration’s increasingly combative stance toward global trade partners.

While Donald Trump’s broadsides this week against what he deemed unfair trade practices focused on industrial metals, comments he made over the past couple of months about the tech industry indicate it could soon come in for targeting as well. In January, Trump said the US was considering a fine on China because it had forced US companies to share their intellectual property as a cost of doing business there. Then in his first State of the Union address, Trump pledged “strong enforcement” of US rules that protect business secrets.

Those warnings are now sounding more ominous to investors concerned about a trade war between the world’s two biggest economies.

Chris Krueger, an analyst at Cowen Washington Research, notes that semiconductors are one of six “core industries” in Trump’s America First agenda, along with steel, aluminium, vehicles, aircraft and shipbuilding. He said a US Trade Representative report on forced technology transfers by China may come in a matter of weeks, way before the official Aug. 18 deadline, and could recommend tariffs or bans on Chinese investment or joint ventures.

If Trump does decide to crack down on intellectual property theft, US-based semiconductor companies that have Chinese customers or factories in China could get caught in the crossfire. China is the largest market for the chip industry and if it were to retaliate some US companies may suffer.

“Reciprocity on the part of China in IP crackdowns could have a substantial effect on manufacturing and IP of companies,” said Matt Larson, a Bloomberg Intelligence litigation analyst.

One sector high-flyer with significant China exposure, Nvidia Corp, had been up 25 per cent year-to-date. It sold off as much as 5.7 per cent yesterday after Trump made his steel tariff comments, and is dropped as far as 4.5 per cent today before recovering. The move over the past two days is worse than the broader market sell-off of about 2 per cent, reflecting the concern about a Trump tech crackdown.

Other chip stocks with significant China exposure include Qualcomm Inc, Micron Technology Inc, Intel Corp and Advanced Micro Devices Inc.