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A report suggests the US is planning more export restrictions on semiconductor tech to China, while Trump recently said Taiwan should pay the US for protection.
The stock prices of some of the biggest global chipmakers have taken a big hit as a result of geopolitical tensions pouring out of the US.
This plunge follows a Bloomberg report that the US is considering tighter restrictions for exports of advanced semiconductor technology to China. The two countries have suffered from rising trade tensions for years, with the US issuing chip restrictions as a result.
This report claims the US is considering using the most severe trade restrictions available if companies continue giving China access to advanced semiconductor technology. Following this report, the stock prices of various chipmakers and related companies were impacted including ASML, Nvidia, Tokyo Electron, Arm, AMD and Qualcomm.
The stock prices were impacted further from a recent interview with former US president Donald Trump, who told Bloomberg that Taiwan should pay the US for protection from China. This raised concerns about US support for Taiwan should Trump win the upcoming presidential election.
TSMC (Taiwan Semiconductor Manufacturing Company) is one of the world’s largest and most advanced contract chip manufacturers. A report by The Economist last year claims Taiwan produces more than 60pc of the world’s semiconductors and more than 90pc of its most advanced chips.
The stock price of TSMC fell following Trump’s comments, despite the company sharing a highly successful second quarter with its profits rising by 36pc.
The US issued restrictions on the export of AI chips to China last year and said these restrictions aimed to prevent advanced hardware from being deployed for military use. In May, the US also announced a series of stronger tariffs aimed at various Chinese components and products, including semiconductors.
But the various restrictions and sanctions may be more focused on economic competition than military security. The US has been investing billions of dollars into various projects with chip manufacturers to improve its domestic production of semiconductors. In a statement in May, the US White House said the raised tariffs on Chinese semiconductors is an “important initial step” to protect these investments.
The White House also said that China has gained a “growing market share” in this sector and that its capacity expansion risks “driving out investment by market-driven firms”.
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