Asian chip stocks plummeted on Thursday following a significant selloff on Wall Street, spurred by reports that the U.S. is contemplating stricter export controls on advanced semiconductor technology to China. This news has intensified concerns over the ongoing trade tensions between the two superpowers.
Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest chip supplier, witnessed a sharp decline, with its shares falling as much as 4.3% during Asian trading. Although TSMC later pared some of these losses, the company’s market value still suffered significantly, shedding roughly T$2 trillion over two days. This downturn came despite TSMC reporting better-than-expected revenue and profit expectations for the second quarter.
TSMC’s suppliers also faced substantial losses. Japanese machinery companies Tokyo Electron and Screen Holdings saw their shares drop by nearly 9% and over 8%, respectively. Other related stocks, such as lithography materials provider Tokyo Ohka Kogyo and industrial water company Organo, also experienced declines, falling by 4.53% and 3.13%, respectively.
The potential for tighter U.S. export restrictions stems from the Biden administration’s consideration of invoking the foreign direct product rule, which would impose controls on foreign-made products that utilize American technology. This move could significantly impact non-U.S. companies exporting critical chipmaking equipment to China, further straining global supply chains.
South Korean chip stocks were not immune to the selloff. Samsung Electronics’ shares slid by nearly 2%, while SK Hynix tumbled almost 5%, and SK Square plunged nearly 10%. These declines reflect the broader market’s reaction to the escalating trade restrictions and their potential impact on the semiconductor industry.
The ripple effects of these developments were also felt on Wall Street, where major chipmakers such as ASML and Nvidia experienced significant losses. ASML Holdings, which produces machines essential for creating advanced chips, saw its shares drop more than 12%, despite reporting strong second-quarter earnings. Nvidia, along with other major players like Arm, AMD, Marvell, Qualcomm, and Broadcom, ended the trading day with substantial losses.
In a separate development, U.S. Republican presidential candidate Donald Trump suggested that Taiwan should pay the U.S. for defense services, adding further uncertainty to the geopolitical landscape. Trump’s comments, coupled with the potential U.S. export restrictions, have contributed to the heightened volatility in the chip market.
