What Was up With the Semis on Monday?

It was sort of odd that on such a mixed day, and on a day that the Biden administration announced increased restrictions on sales of high-end technology to Chinese buyers. This round of increased restriction focused on memory chips as well as semiconductor equipment suppliers, while the Biden administration also added 140 Chinese companies to its trade blacklist.

Instead of reacting in such a way as traders might have expected, the Philadelphia Semiconductor Index gained 2.61% and the Dow Jones US Semiconductor Index gained 1.28% for the session. Lam Research (LRCX) led the way, gaining 6.27%. followed by Taiwan Semiconductor (TSM), Applied Materials (AMAT) and Marvell Technology (MRVL), all of whom scored runs of at least 4.5% for the day. Marvell will report quarterly earnings this evening.

The why? Simple. The increased restrictions had been priced in and what had been priced in was more severe than what actually broke as news. For one, the restrictions on equipment suppliers were not nearly as strict as feared. Secondly, most industry group watchers had expected at least 200 Chinese companies to be blacklisted.