Wall Street’s semiconductor index lost more than $500 billion in stock market value on Wednesday in its worst session since 2020 after a report said the United States was mulling tighter curbs on exports of advanced semiconductor technology to China.
Remarks from Republican presidential nominee Donald Trump saying key production hub Taiwan should pay the United States for its defense deepened selling in chip stocks.
The latest worries for chip investors come after Washington in recent years has adopted a more protective stance for the U.S. semiconductor manufacturing industry, which it views as strategically important for competing against China.
The United States has told allies it is considering using the most severe trade curbs available if companies continue giving China access to advanced semiconductor technology, Bloomberg News reported on Tuesday.
U.S.-listed shares of Dutch chipmaking equipment provider ASML Holding (ASML.AS), opens new tab slumped 13% following the report even though it beat second-quarter profit estimates.
AI heavyweight Nvidia (NVDA.O), opens new tab fell almost 7%, losing more than $200 billion in market capitalization.
Companies with U.S. chip manufacturing operations gained, with GlobalFoundries (GFS.O), opens new tab jumping almost 7% and Intel (INTC.O), opens new tab edging 0.35% higher. Some analysts believe Intel could benefit from the geopolitical tensions as it is building several plants in the country
Smaller rival AMD (AMD.O), opens new tab and Arm dropped about 10%. Micron (MU.O), opens new tab fell 6% and Broadcom (AVGO.O), opens new tab lost 8%.
“Market reactions are likely short-lived because the fundamental factors driving these markets haven’t changed. Yes, U.S. restrictions on shipments to China will likely increase somewhat – regardless of the U.S. election outcome – but they’ve already been in place for a while,” said Bob O’Donnell, chief analyst at TECHnalysis Research.
President Joe Biden’s administration has moved aggressively to curb Chinese access to cutting-edge chip technology, including sweeping restrictions issued in October to limit exports of AI processors designed by firms including Nvidia.
