Nandini Roy Choudhury
Brief news
- ASML, Nvidia, and TSMC saw significant declines in their semiconductor equities due to reports of increased export restrictions from the US and escalating geopolitical tensions.
- Tokyo Electron’s shares in Japan closed nearly 7.5% lower, while ASML’s Netherlands-listed shares were down 6.5% in morning trade.
- Former US President Donald Trump’s remarks about Taiwan and the semiconductor sector also contributed to the decline in semiconductor equities.
Detailed news
ASML, Nvidia, and TSMC experienced substantial declines in global semiconductor equities as a result of reports of increased export restrictions from the United States and an escalation of geopolitical tensions that were exacerbated by remarks made by former U.S. President Donald Trump.
Tokyo Electron’s shares in Japan closed nearly 7.5% lower, while ASML’s Netherlands-listed shares were down 6.5% in morning trade.
The actions were taken in response to Bloomberg’s report on Wednesday that the Biden administration is contemplating a comprehensive assault on the export of critical chipmaking equipment to China by companies.
Washington’s foreign direct product rule, or FDPR, enables the United States to impose restrictions on foreign-made products, regardless of whether they incorporate even the slightest quantity of American technology. This has the potential to impact companies that are not based in the United States.
The U.S. State Department, the Bureau of Industry and Security, and the Office of the U.S. Trade Representative have been contacted by CNBC for their input on the report.
ASML’s stock price declined despite the fact that its second-quarter earnings exceeded market expectations. Nevertheless, China accounted for 49% of its sales during the period, underscoring the extent to which the company is vulnerable in the event of more stringent regulations. The devices necessary for the production of the most sophisticated chips in the world are manufactured by ASML.
Semiconductor equities were further undermined by remarks made by former president Trump.
In an interview with Bloomberg Businessweek that was published on Tuesday, Trump stated that Taiwan should reimburse the United States for its defense expenditures. Additionally, the former president asserted that Taiwan accounted for “approximately 100%” of the semiconductor sector in the United States.The comments have raised concerns about the United States’ dedication to defending Taiwan in the event of an attack by China, which regards the democratically governed island as part of its territory, and if Trump is elected president.
On Wednesday, the Taiwan-listed shares of TSMC experienced a 2.4% decline.
The U.S. semiconductor equities were also affected by the geopolitical tensions. In premarket trading, the VanEck Semiconductor ETF experienced a decline of approximately 2.7%, while Nvidia experienced a decline of approximately 3% prior to the market opening. Arm and Applied Materials were among the other U.S.-listed laggards in U.S. premarket trade.
Source : CNBC News
