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Top trade negotiators for the U.S. and China said they came to terms on a range of contentious points, setting the table for Presidents Trump and Xi Jinping to finalize a deal and ease trade tensions that have rattled global markets.

After two days of talks in Malaysia wrapped up Sunday, a Chinese official said the two sides reached a preliminary consensus on topics including export controls, fentanyl and shipping levies.

U.S. Treasury Secretary Scott Bessent, speaking later in an interview with CBS News, said Trump’s threat of 100% tariffs on Chinese goods “is effectively off the table” and he expected Beijing to make “substantial” soybean purchases as well as offer a deferral on sweeping rare-earth controls. The U.S. wouldn’t change its export controls directed at China, he added.

“So I would expect that the threat of the 100% has gone away, as has the threat of the immediate imposition of the Chinese initiating a worldwide export control regime,” Bessent said. He separately told ABC News he believed China would delay its rare-earth restrictions “for a year while they reexamine it.”

Bessent telegraphed a wide-ranging agreement between Trump and Xi that would extend a tariff truce, resolve differences over the sale of TikTok and keep up the flow of rare-earth magnets necessary for the production of advanced products from semiconductors to jet engines. The two leaders are also planning to discuss a global peace plan, he said, after Trump said publicly he hoped to enlist Xi’s help in ending Russia’s war in Ukraine.

The encouraging signals from both sides of the negotiations were a marked contrast from recent weeks, when Beijing’s announcement of new export restrictions and Trump’s reciprocal threat of staggering new tariffs threatened to plunge the world’s two largest economies back into an all-out trade war.

Staving off China’s rare-earth restrictions is “one of the major objectives of these talks, and I think we’re progressing toward that goal very well,” U.S .Trade Representative Jamieson Greer said on “Fox News Sunday.”

Trump predicted a “good deal with China” as he spoke with reporters on the sidelines of the Assn. of Southeast Asian Nations summit in Kuala Lumpur, the Malaysian capital, saying he expected high-level follow-up meetings in China and the U.S.

“They want to make a deal, and we want to make a deal,” Trump said.

Still, markets will be closely watching the details of the ultimate agreement, after nearly a year of head-spinning changes to trade and tariff policies between Washington and Beijing.

Chinese trade envoy Li Chenggang said he believes that the sides had reached consensus on fentanyl — suggesting the U.S. might lift or reduce a 20% tariff it had imposed to pressure Beijing to halt the flow of precursor chemicals used to make the deadly drug. He said the nations would also address actions the Trump administration took to impose port service fees on Chinese vessels, which prompted Beijing to put retaliatory levies on U.S.-owned, -operated, -built or -flagged vessels.

Li, whom Bessent called “unhinged” just days ago, described the talks as intense and the U.S. position as tough, but hailed the signs of progress. Both sides will now brief their leaders ahead of a planned summit between Trump and Xi on Thursday.

“The current turbulences and twists and turns are ones that we do not wish to see,” Li told reporters, adding that a stable China-U.S. trade and economic relationship is good for both countries and the rest of the world.

The reopening of soybean purchases, if realized, could provide a significant political win for Trump.

China imposed retaliatory tariffs on U.S. farm goods in March, effectively slamming the door shut on American soybeans before the harvest even began. The Asian nation last year purchased $13 billion in U.S. beans — more than 20% of the entire crop — for animal feed and cooking oil, and the freeze has rocked rural farmers who represent a key political base for the president.

Perhaps more important is resolving the the U.S.’ rare-earths tussle with China, which fought back against Trump’s trade offensive earlier this year by cutting off supplies of the materials. Although flows were restored in a truce that saw tariffs lowered from levels exceeding 100%, China this month broadened export curbs on the materials after the U.S. expanded restrictions on Chinese companies.

The negotiations took place at the skyscraper Merdeka 118 as Trump met with Southeast Asian leaders at a nearby convention center, where he discussed a series of other framework trade agreements, seeking to diversify U.S. trade away from China.

The Chinese delegation was led by He, China’s top economic official, and included Vice Finance Minister Liao Min. Greer, the U.S. trade representative, was also part of the talks.

Trump’s meeting with Xi this week will be their first face-to-face sit-down since his return to the White House. The U.S. leader has said direct talks are the best way to resolve issues including tariffs, export curbs, agricultural purchases, fentanyl trafficking and geopolitical tinderboxes such as Taiwan and the war in Ukraine.

“We’ll be talking about a lot of things,” he said. “I think we have a really good chance of making a very comprehensive deal.”

Flatly and Xiao write for Bloomberg. Bloomberg writers Sam Kim and Tony Czuczka contributed to this report.

Taiwan Semiconductor Manufacturing (TSM 0.24%) is far from the flashiest artificial intelligence (AI) name out there. It doesn’t design chips like Nvidia, Advanced Micro Devices, and Broadcom, and, as such, it doesn’t tend to get the same hype.

However, all these chipmakers hand their designs to TSMC for large-scale manufacturing, turning them into real products. That’s why it’s not only one of the best, but one of the safest ways to invest in the AI infrastructure buildout. It wins no matter which chip designer takes the lead, and it’s generating a ton of cash doing it.

Even Nvidia’s CEO Jensen Huang went out of his way to praise the company. He called TSMC “one of the greatest companies in the history of humanity,” adding that “anybody who wants to buy TSMC stock is a very smart person.” That is not the kind of praise Huang throws around lightly.

Image source: Getty Images.

TSMC has a foundry nobody can catch

TSMC is the top foundry in the world, producing most of the world’s advanced chips. Rival Intel (INTC 2.20%) has been trying to build its own foundry business, but it is losing money and hasn’t been able to gain any ground. In fact, the U.S. government recently made a large investment in the struggling company, reportedly to help bolster it.

Samsung, meanwhile, has struggled with production yields. It also recently lost one of its advanced chip designs, as Alphabet switched to TSMC for its Tensor G5 chip used in its Pixel smartphones. Neither Intel nor Samsung has shown that they can match the scale or reliability of TSMC.

That’s why TSMC has locked in almost every large AI chipmaker as a customer. Chip designers are constantly looking to shrink node sizes, and TSMC is the only foundry that has shown it can consistently produce advanced nodes with strong yields. Nodes are a reference to the size of the transistors used on a chip, measured in nanometers. With smaller nodes, more transistors can be packed onto the chip, which improves performance and power efficiency.

Smaller nodes are becoming an increasingly larger part of TSMC’s mix. Chips built on 7-nanometer or smaller nodes are already nearly three-quarters of TSMC’s revenue, while its 3nm chips alone are almost one-quarter. Meanwhile, it is already preparing to move into 2nm.

TSMC is a cash flow machine

One of the most overlooked parts of TSMC’s story is its cash generation. In 2024, it produced more than $26.5 billion in free cash flow. That was after spending heavily on building new fabs. So far this year, it’s already generated over $15 billion in free cash flow despite continued heavy capex spending. It’s also paying a growing dividend off that mountain of cash.

Most people think of foundries as low gross margin businesses; however, TSMC is changing that narrative. Its leadership in advanced nodes has given it strong pricing power over the years. Nobody else can deliver chips at the same density and yield, so customers are willing to pay up. That’s why its margins have stayed strong and have been increasing.

TSMC is an under-the-radar stock

Investors don’t talk about TSMC with the same excitement they talk about Nvidia or AMD. That could be because it’s not a brand consumers recognize, or perhaps because the foundry business isn’t just quite as exciting. It’s also not a U.S.-based company, with its headquarters in Taiwan.

However, TSMC has been one of the biggest beneficiaries of the AI buildout, and it should continue to be a big winner moving forward. Last quarter, its revenue climbed 44% to $30 billion, while its profits soared. Meanwhile, management expects AI chip demand to grow more than 40% annually through 2028. The company is working closely with its largest customers to increase capacity, so it should have good visibility into this growth.

Overall, TSMC is one of the most important companies in the AI supply chain. Without it, the current AI infrastructure buildout wouldn’t be possible. It’s growing rapidly, expanding margins, and generating a boatload of cash.

Despite that, the stock is one of the most attractively valued AI plays in the market, trading at a forward price-to-earnings (P/E) ratio of 24.5 times based on analysts’ 2025 estimates and a price/earnings-to-growth ratio (PEG) of less than 0.65. Stocks with PEG ratios below 1 are generally considered undervalued.

Investors would be smart to heed Jensen Huang’s advice and be a buyer of TSMC.

Millions of dollars began flowing into campaigns supporting and opposing an effort to redraw California’s congressional districts on the November ballot, notably $10 million from independent redistricting champion Charles Munger Jr.

The checks, reported Friday in state campaign finance disclosures, were made on Thursday, the day the state Legislature and Gov. Gavin Newsom called a special election to replace the congressional districts drawn by an independent commission in 2021 with new districts that would boost the number of Democrats elected to Congress in next year’s midterm election.

The move is an effort by California Democrats to counter Texas Republicans’ and President Trump’s efforts to boost the number of GOP members.

Munger, a GOP donor and the son of a billionaire who was Warren Buffett’s right-hand man, bankrolled the 2010 ballot measure that created independent congressional redistricting in California. He donated $10 million to the “No on Prop. 50 – Protect Voters First” campaign,” which opposes the proposed redistricting.

“Charles Munger Jr. is making good on his promise to defend the reforms he passed,” said Amy Thoma, a spokesperson for the Voters First Coalition, which opposes the ballot measure and includes Munger.

A spokesperson for the campaign supporting the redrawing of congressional boundaries accused Munger of trying to boost the GOP under the guise of supporting independent redistricting.

“It’s no surprise that a billionaire who has given extensively to help Republicans take the house and [former Republican House Speaker] Kevin McCarthy would be joining forces to help Donald Trump steal five House seats and rig the 2026 midterm before a single American has voted,” said Hannah Milgrom, spokesperson for “Yes on 50: the Election Rigging Response Act.” “Prop 50 is America’s best chance to fight back – vote yes on November. 4.”

The campaign backing the ballot measure received $1 million on Thursday from a powerful labor group, SEIU’s state council; $300,000 from businessman Andrew Hauptman; and a flurry of other donations, according to the California secretary of state’s office. That is on top of the $5.8 million the campaign reported having in the bank as of July 30, including millions of dollars in contributions from House Majority PAC, which is focused on electing Democrats to Congress, and Newsom’s 2022 gubernatorial reelection campaign.

Redistricting typically happens once a decade after the U.S. census. Trump asked Texas lawmakers to redraw their congressional districts earlier this year, arguing that the GOP was entitled to five more members from the state. In response, California Democrats have pitched new district boundaries that could result in five more Democrats being elected to Congress.