Written By Lisa Murimi
Technology stocks around the world have slumped due to growing fears about the global computer chip industry.
The sell-off followed reports that the Biden administration may further tighten restrictions on exports of semiconductor equipment to China.
Comments by former US President Donald Trump, suggesting Taiwan should pay for its own defense, exacerbated concerns.
The tech-heavy Nasdaq index in the US closed 2.7% lower on Wednesday. Chip stocks also tumbled in Europe and Asia, with Taiwan Semiconductor Manufacturing Company (TSMC) dropping 2.4% and semiconductor equipment maker Tokyo Electron falling 8.8% on Thursday.
Nvidia shares plunged 6.6% and AMD lost over 10% in New York. In Europe, ASML, a leading chip-making machine manufacturer, saw its shares tumble almost 11%.
Bob O’Donnell, chief analyst at TECHnalysis Research, noted, “Regardless of the outcome of the elections… I think we will see the US increase some of the restrictions. How far they will take it, though, is the big question.”
The declines were spurred by Bloomberg News reporting that the US government is preparing to impose its strictest curbs yet on semiconductor-making equipment exports to China if companies like ASML and Tokyo Electron continue to provide advanced chip technology to the country.
ASML declined to comment, and Tokyo Electron did not immediately respond to a request for comment. The US Commerce Department has also been contacted for a statement.
Previously, the Biden administration restricted exports of advanced semiconductors to China, particularly those used in artificial intelligence (AI) technology, in October.
Trump’s remarks on Taiwan also hinted at possible disruptions in global chip supplies, as Taiwan produces most of the world’s advanced chips.
Despite the market’s reaction, Marco Mezger, Executive Vice President of Neumonda, emphasized, “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.”
