The share price of several major semiconductor producers has taken a sharp dive, seemingly in response to a pair of political developments in the United States.
On Wednesday TSMC shares dipped 7.98 percent on the New York Stock Exchange, while ASML dropped 10.93 percent, Tokyo Electron was off by 9.25 percent, Nvidia dropped 6.62 percent, AMD fell 10.21 percent, and the tech-heavy NASDAQ index fell 2.77 percent – its worst day since 2022.
One of the political events that appears to have soured market sentiment was a report claiming the Biden administration is considering tighter restrictions of chip manufacturing tech to China.
The fresh restrictions would reportedly hit Tokyo Electron and ASML, which both make chipmaking equipment without which it’s impossible to manufacture advanced semiconductors. The potential for further sanctions to harm both businesses is clear, and further closure of the Chinese market is obviously bad news for other chipmakers as it will deprive them of a giant pool of buyers.
A second item of concern is an interview with Republican presidential candidate Donald Trump, who was asked about whether he would defend Taiwan against China if he returned to the White House, and offered the following:
That serving of word salad is both inaccurate – Taiwan has not taken all of the US’s chip business, and Taiwanese firms like TSMC are building fabs in America – and differs from president Biden’s position: that the US would become involved in kinetic conflict to defend Taiwan.
As such, it represents a potential weakening of current US policy. And as Trump accurately assessed, China knows Taiwan’s chip plants are a prize – they’re among the world’s most sophisticated such facilities. They are of such strategic significance that an official from the last Trump administration has suggested they would be destroyed in the event of an invasion.
Intel – which operates its own foundries, has set up a biz to rent them out, and is less reliant on Taiwanese manufacturers – did not experience a share price drop on Wednesday. Instead, it enjoyed a 0.35 percent upward hop. Which tells you investors feel it isn’t impacted by whatever has seen them devalue other semiconductor concerns. ®
