Shares of several global chipmakers, including Nvidia and Taiwan Semiconductor Manufacturing Company (TSMC), dropped on Wednesday as investors reacted to potential new export controls from the Biden administration and comments on Taiwan by former President Donald Trump.
The market impacts were immediate. Here’s how major chipmakers’ stocks performed on Wednesday morning:
– ASML’s Netherlands-listed shares fell by 7.7%.
– Tokyo Electron shares in Japan closed down nearly 7.5%.
– TSMC’s Taiwan-listed stock decreased by 2.4% at market close.
– Nvidia shares were 4% lower in Nasdaq pre-market trading.
– Arm stock dropped 4.86% before market open.
– Applied Materials shares dipped 5.24% in pre-market trading.
The declines came after Bloomberg reported late Tuesday that the Biden administration is contemplating severe trade restrictions. These restrictions could greatly limit firms like Tokyo Electron and ASML Holding from providing China access to advanced semiconductor technology. The proposed foreign direct product rule (FDPR) would impose stringent controls on the sharing of American technology, affecting both U.S. and non-U.S. companies.
Earlier, former President Donald Trump stated in a Bloomberg Businessweek interview that Taiwan should compensate the U.S. for its defense efforts. He also claimed that Taiwan has taken nearly all of America’s semiconductor business. TSMC, based in Hsinchu, Taiwan, is the world’s largest chipmaker, producing approximately 90% of the most advanced chips used in devices ranging from iPhones to artificial intelligence models.
Given Taiwan’s pivotal role in the global chip industry, concerns about U.S. defense of the island, especially amidst increasing military activity from China, are significant.
“If China was to invade, that would shut down and create an economic crisis,” said House Foreign Affairs Committee Chairman Michael McCaul, who led a bipartisan delegation to Taiwan in May.