As expected, the shares of ZTE's optical component suppliers in the US rose sharply after President Trump signaled that an agreement was in place to end a recent ban on sales of the Chinese telephone and telecommunications equipment manufacturer. And NXP Semiconductors (NXPI) posted a double-digit profit after China's regulatory authority announced (probably not accidentally) that they would restart their review of the $ 44 billion Qualcomm (QCOM) contract to buy the Dutch chipmaker.
But broader easing of trade tensions between the world's two largest economies – Chinese Vice Premier Liu He arrives in Washington on Tuesday for trade talks, and both the US and Chinese authorities at least say the right things about openness to Deal ̵
As the Trump government made intellectual property protection an important issue when it published tariff proposals for Chinese tech, electronics, and industrial equipment suppliers, software vendors and patent licensing companies were able to compromise benefit. Microsoft (MSFT), which has long complained about the impact of piracy on its Chinese Windows and Office sales, would certainly have nothing against a trade agreement that provides for Beijing's commitment to make greater efforts to address IP theft , Qualcomm, in turn, would benefit if a deal made it easier for the company to resolve its patent litigation dispute with Huawei (companies were notified of settlement talks in March).
U.S. IT giants, many of whom plummeted in 2013 and 2014 following the NSA spy scandal, no longer need to worry that a trade war will persuade Beijing to repress local businesses and government agencies. And Cisco (CSCO) and Juniper Networks (JNPR) would not have to worry about China responding to Washington's actions against ZTE by retaliation against US telecommunications equipment suppliers.
Similarly, Apple (AAPL) and other large companies US consumer brands with significant Chinese presence need not worry about dealing with consumer boycotts triggered by a trade war. Former boycotts of South Korean and Japanese goods – at times encouraged by local media – have weighed heavily on exporters' sales.
And it's certainly hard to overlook what impact a trade agreement might have on the tech M & A environment. Especially for the chip industry, which has experienced enormous consolidation since 2013. China's reluctance to reject either the Qualcomm / NXP deal or Toshiba's $ 18 billion deal to sell its flash memory storage unit to a group led by Bain Capital. After securing the required licenses elsewhere, the two companies had one chaotic effect on the M & A environment of the chip.
Marvell Technology (MRVL) and Cavium (CAVM) posted strong gains on Monday as investors turned Marvell's $ 6 billion sale to Cavium is less likely to be blocked by Beijing. Broadcom (AVGO), which has bought many chip makers in recent years and claims to reject hostile quotes for Qualcomm, claims to have won Beijing.
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Jim Cramer and the AAP team hold positions in Microsoft and Apple for their Action Alerts PLUS Charitable Trust Portfolio . Would you like to be warned before Cramer buys or sells MSFT and AAPL? Learn more .