Tech
Biden’s export crackdown, Trump’s comments on Taiwan shake global tech stocks
Global chip stocks fell sharply on Wednesday, July 17, 2024, reflecting growing concerns about potential U.S. export restrictions and rising geopolitical tensions. The decline hit major players in the semiconductor industry, including ASML, Nvidia, and TSMC.
According to a relationship By Arjun Kharpal for CNBC Netherlands-based ASML, a key supplier of chip manufacturing equipment, saw its shares fall 6.5% in morning trading. This decline came despite the company reporting better-than-expected second-quarter earnings. Notably, 49% of ASML’s sales during this period were to China, highlighting the company’s vulnerability to any potential export restrictions.
Similarly, Japanese semiconductor equipment maker Tokyo Electron closed down nearly 7.5%, underscoring the widespread impact of these concerns across markets.
The catalyst for this market reaction appears to be Bloomberg relationship suggesting that the Biden administration is considering implementing a broad rule to restrict companies from exporting essential chipmaking equipment to China. This potential expansion of the Direct Foreign Products (FDPR) rule could allow the U.S. to control foreign-made products that use even minimal U.S. technology, potentially significantly impacting non-U.S. companies.
Adding fuel to the fire were comments made by former US President Donald Trump in a recent interview with Bloomberg Businessweek. Trump suggested that Taiwan should pay the U.S. for defense and said that Taiwan has taken “about 100%” of America’s semiconductor business. The remarks have raised questions about the future of the U.S. defense commitment to Taiwan, particularly if Trump returns to office.
The geopolitical implications of Trump’s statements were felt on the Taiwanese market: on Wednesday, shares of Taiwan Semiconductor Manufacturing Co. (TSMC) closed down 2.4%.
The ripple effects of these developments were also evident in U.S. markets. The VanEck Semiconductor ETF fell 3.5% in pre-market trading, while tech giant Nvidia fell 4%. Other U.S.-listed semiconductor companies, including Arm and Applied Materials, also saw declines in pre-market trading.
This market reaction underscores the delicate balance between technological progress, international trade, and geopolitical relations in the semiconductor industry. As tensions between the United States and China continue to simmer, and with Taiwan’s crucial role in global chip production, the semiconductor industry remains highly sensitive to political developments and regulatory changes.
Investors and industry observers are now closely watching any official announcements from the U.S. government regarding export restrictions, as well as monitoring the ongoing geopolitical debate over Taiwan and its semiconductor industry.
Featured image via Plumage