Global technology stocks took a hit as fears surrounding the computer chip industry intensified. The sell-off was triggered by reports suggesting that the Biden administration could tighten restrictions on exports of semiconductor equipment to China.
Former US President Donald Trump’s comments about Taiwan, the largest chip producer, potentially having to pay for its own defense further fueled concerns in the market. In response, the tech-heavy Nasdaq index in the US closed 2.7% lower on Wednesday, with chip stocks also plummeting in Europe and Asia.
Bob O’Donnell, chief analyst at TECHnalysis Research, expressed his belief that regardless of the election outcome, the US is likely to increase restrictions on the industry. The extent of these restrictions, however, remains uncertain.
In Asia, chip-making giant TSMC saw a 2.4% decline, while Tokyo Electron, a semiconductor equipment maker, dropped by around 8.8%. Nvidia and AMD also experienced significant losses in New York, with ASML, a chip-making machine manufacturer in Europe, seeing a nearly 11% decrease in shares.
The market turmoil followed reports that the US government is preparing to impose strict curbs on semiconductor equipment exports to China, particularly targeting companies like ASML and Tokyo Electron for providing advanced chip technology to the country.
Both the US Commerce Department and the companies involved declined to comment on the matter. The Biden administration has previously taken steps to limit China’s access to advanced chip technology, including restricting exports of semiconductors used in artificial intelligence.
Despite the uncertainty and market volatility, Marco Mezger, Executive Vice President of Neumonda, a memory chip technology company, remains optimistic about the long-term prospects of the semiconductor industry. Investors are closely monitoring the situation as global chip supplies face potential disruptions amid escalating tensions.
