Asia’s top chip stocks tumbled Tuesday, ensnared in an escalating US-China tech race that has erased more than $240 billion from the sector’s global market value.
Taiwan Semiconductor Manufacturing Co., the world’s largest contract chipmaker, plunged a record 8.3% while Samsung Electronics Co. and Tokyo Electron Ltd. also declined. The selloff spread to the foreign-exchange market as investors tallied up the damage from the sweeping curbs the US is imposing on companies that conduct technology business with China.
The Biden administration measures erect barriers of entry to China’s market by limiting the ability of US firms to sell equipment and tech to their Chinese counterparts. There are concerns that the restrictions could spread if Washington widens the initiative to include other countries, while questions also remain over the scope and final impact of the moves.
The US announced the export curbs Friday, and there have been suggestions that similar actions may be deployed in other countries to ensure international cooperation. The announcement spurred a two-day rout of over 9% in the Philadelphia Stock Exchange Semiconductor Index that saw it close Monday at its lowest level since November 2020. Markets in Korea, Japan and Taiwan were shut that day for holidays.
The US measures include restrictions on the export of some types of chips used in artificial intelligence and supercomputing, and also tighter rules on the sale of semiconductor equipment to any Chinese company. Washington also added more Chinese firms to a list of companies that it regards as “unverified,” which means US suppliers will face new hurdles in selling technologies to those entities.
“It is difficult to call a bottom on the performance of the chip sector,” said Gary Dugan, chief executive officer of the Global CIO Office. “The big story is that the West is becoming profoundly more concerned about security around any form of technology. We see no reason to re-enter the sector for the moment despite the profound poor performance.”
US chip stocks were on track to decline for a third day, with Nvidia Corp., Advanced Micro Devices Inc., Qualcomm Inc. and Texas Instruments Inc. all down more than 1% before the bell. Chip-tool maker ASML Holding NV traded down 2.3% in Amsterdam, bringing three-day losses to more than 11%.
Full Article: https://www.bloomberg.com/news/articles/2022-10-11/chip-stocks-fall-across-asia-as-japan-korea-return-from-holiday
Buying opportunity or too early? Do you view the US-China tensions as a long-term headwind or temporary?
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