As the U.S. Pulls Chip Making Back Home, the Toolmakers Win First
2026-10-23 15:45
•Rick Orford •The Motley Fool
•••••• •••••• Axe Cap view
US Chip Re-shoring Boosts Equipment Makers First
As semiconductor manufacturing returns to the US, toolmakers like ASML and Applied Materials stand to gain before chipmakers fully ramp up.
The US government's push to bring chip production back home means gear suppliers are the early winners. ASML, with its high-tech lithography machines, and Applied Materials, which sells a broad range of fab equipment, benefit first since factories pay for tools before starting production. For South African investors, while these aren’t JSE stocks, the wider impact comes via the USD/ZAR. A stronger dollar from hefty US capital expenditure could keep the rand under pressure, making rand-hedged foreign investments more expensive. Local chip users like Naspers and Prosus may feel the squeeze on earnings in foreign currency terms but could still benefit from AI-driven tech growth in the medium term. Intel’s struggles with execution and Taiwan-related risks at TSMC underline that the supply chain remains fragile. Be wary of overplaying this theme just yet as geopolitical tensions or a global tech pullback could derail expansion plans and valuations here and abroad. this is just our opinion and not financial advice
Watch USD/ZAR closely and consider trimming domestic tech exposure like Naspers if the rand weakens further. Avoid direct plays on US chipmakers given geopolitical risks and valuation. Prefer staying liquid and ready to buy if tech stocks or the rand correct sharply.
- USD/ZAR
- Naspers
- US-China geopolitical tensions
- Tech sector valuation pullback
5/10
As the U.S. invests billions in domestic chip manufacturing, equipment suppliers ASML and Applied Materials are positioned to benefit first, followed by fab operators like TSMC, Intel, and Micron. The supply chain hierarchy means toolmakers get paid before factories reach full production, though each company faces distinct challenges including geopolitical risks, execution hurdles, and market cyclicality.
Our take is based on reporting first published by The Motley Fool.