By D. Maan, Jadetimes News
Global Technology Stocks Slump Amid Concerns Over Chip Industry
Technology stocks worldwide have taken a significant hit due to growing concerns about the global semiconductor industry. The sell off was triggered by reports suggesting that the Biden administration might further tighten restrictions on exporting semiconductor equipment to China. Adding to these concerns were comments from former US President Donald Trump, suggesting that Taiwan, the leading producer of chips, should bear the cost of its own defense.
In the United States, the tech heavy Nasdaq index closed 2.7% lower on Wednesday. Major chip stocks also experienced sharp declines across Europe and Asia. "Regardless of the outcome of the elections... I think we will see the US increase some of the restrictions," said Bob O'Donnell, chief analyst at TECHnalysis Research. "How far they will take it, though, is the big question."
In Asia, Taiwan Semiconductor Manufacturing Company (TSMC) saw its shares drop by 2.4% on Thursday, while Japanese semiconductor equipment maker Tokyo Electron's stock fell by around 8.8%. In the US, Nvidia's shares closed 6.6% lower on Wednesday, and AMD saw a more than 10% decline. In Europe, ASML, a key manufacturer of chip making machines, saw its shares tumble by nearly 11%.
The market reaction followed a Bloomberg News report on Wednesday indicating that the US government is preparing to impose its strictest curbs yet on semiconductor making equipment to China. This move could impact firms like ASML and Tokyo Electron if they continue to provide China with access to advanced chip technology.
The Biden administration has previously taken steps to limit China's access to advanced chip technology. In October, it restricted exports of advanced semiconductors used in artificial intelligence (AI) technology to China.
Further exacerbating the market's concerns were comments from Donald Trump regarding Taiwan. Taiwan produces the majority of the world's advanced chips, and any potential disruption to its production could have significant global ramifications. "Investors always react to any remarks from the US, but despite these comments, the long term business trend for the semiconductor industry is clearly going up," said Marco Mezger, Executive Vice President of memory chip technology company Neumonda.
As these developments unfold, the semiconductor industry remains in the spotlight, with investors closely monitoring any potential regulatory changes and their implications for global technology markets.
