TLDRs;
- US-China tensions ease, boosting tech stocks and easing fears of further tariffs.
- Broadcom rises 10% as OpenAI announces a long-term AI chip deal.
- Nvidia, AMD, and Taiwan Semiconductor see strong gains in semiconductor ETFs.
- Advanced chip packaging gains attention as AI demand drives industry growth.
Chip stocks rallied sharply on Monday as easing tensions between the US and China coincided with a major AI chip deal between OpenAI and Broadcom.
Broadcom shares surged 10% following the announcement, while the VanEck Semiconductor ETF gained nearly 4%. Industry heavyweights Nvidia and AMD each climbed over 3%, and other key players, including Taiwan Semiconductor and On Semiconductor, jumped 8% and 9%, respectively. Micron Technology also recorded a gain exceeding 6%.
Investors welcomed reassurance from former President Donald Trump, who stated on Truth Social that issues with China “will all be fine,” alleviating concerns that earlier tariff threats could destabilize the market.
— Rapid Response 47 (@RapidResponse47) October 12, 2025
The calming of geopolitical risks helped tech giants rebound after a steep $770 billion selloff in market value on October 10. Companies like Alphabet and Tesla recouped their recent losses by October 13.
OpenAI Partners with Broadcom
OpenAI, under CEO Sam Altman, is expanding its chip supply strategy with a 10-gigawatt deployment plan in collaboration with Broadcom, set to begin in late 2026 and complete by the end of 2029. This partnership focuses on custom AI accelerators built on Broadcom’s Ethernet networking and reusable hardware intellectual property blocks.
Despite the new deal, OpenAI will continue relying on established suppliers like Nvidia and AMD for near-term compute needs.
The total hardware commitments now approach 33 gigawatts across Nvidia and Broadcom, with Oracle and AMD also included in the plan. Current operations only account for just over 2 gigawatts, underscoring that these agreements are designed for gradual capacity expansion rather than immediate shifts.
Advanced Packaging Spurs Industry Growth
The deal highlights the growing importance of advanced chip packaging, particularly Taiwan Semiconductor’s CoWoS (Chip-on-Wafer-on-Substrate) technology, which places high-bandwidth memory close to processors. Despite strong demand from AI workloads, current utilization remains around 60%, with production expected to reach nearly 100,000 units per month by late 2026.
Vendors specializing in advanced packaging and chiplet interconnects stand to gain as OpenAI and other hyperscalers pursue differentiated custom accelerators. Companies that supply system parts for multi-chip integration could capture a larger market share, especially as AI labs and cloud providers seek high-performance solutions without investing heavily in in-house chip design.
Market Sentiment Strengthens
Monday’s rally underscores how intertwined geopolitical stability and tech market sentiment have become. Investors reacted not only to the Broadcom-OpenAI collaboration but also to the broader perception that US-China relations may stabilize in the near term.
Financial analysts note that the AI-driven chip market continues to expand rapidly, with both established semiconductor firms and emerging suppliers benefiting from long-term infrastructure commitments. With custom accelerators and advanced packaging technology at the forefront, the semiconductor sector may see a second wave of growth as AI adoption accelerates globally.
