LIVE MARKETS-Deglobalization isn't a threat, it's a trade, Bernstein says

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DEGLOBALIZATION ISN'T A THREAT, IT'S A TRADE, BERNSTEIN SAYS

Globalization isn't dying, but it's breaking apart, says Bernstein, while warning investors that trade flows, capital markets and corporate winners are being radically reshuffled under intensifying geopolitical tensions and U.S. protectionist policies.

The report, argues that while global goods trade remains steady, even accelerating outside of China, the global value chain is undergoing a historic transformation. Trump 2.0's aggressive tariff regime is reshaping supply lines and investment patterns at a faster pace than during his first term.

What is different now is the decoupling of strategic industries, as it notes that the U.S. isn't just slapping tariffs on toys; it's targeting semiconductors, AI, defense, shipbuilding, and critical minerals.

Bernstein identifies two emerging models — the "iPhone model" and the "semis model." The first describes mass-market goods relocating to India, Vietnam, and Mexico, while China continues to handle higher-value production, while the second highlights full decoupling in strategic sectors such as semiconductors, AI, defense, and critical materials.

This shift isn't free. U.S. consumers will pay more, multinationals will bleed efficiency, and the dollar risks a long-overdue reckoning.

Micron Technology MU.O is the latest to announce a $200 billion U.S. semiconductor expansion, aiming to produce 40% of its DRAM chips domestically—reducing decades of overseas dependence, spurred by CHIPS Act incentives and tariff concerns.

Meanwhile, Apple AAPL.O and Foxconn have expanded in India, with 97% of iPhones from Foxconn's Tamil Nadu plant exported to the U.S. between March and May, while Foxconn invests $1.5 billion in a new factory, solidifying India as Apple's supply chain hub beyond China.
So who wins? Bernstein outlines two compelling stock baskets: winners include U.S. reshoring, Indian manufacturers, Korean battery firms, and Japanese semiconductor companies, while losers include global consumer goods producers, Chinese exporters, and U.S. firms reliant on global supply chains.

The research highlights a shift toward "sovereignty investing" — backing companies aligned with domestic supply chains, national security priorities and local capex cycles.

Investors who move early to identify new regional and sector leaders stand to benefit from the most significant supply-chain overhaul in decades, the brokerage adds.

(Joel Jose)

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