Shares of major computer chip makers including Nvidia and TSMC continued to fall on Thursday as warnings from both President Biden and Republican nominee Donald Trump rekindled geopolitical concerns among investors.
The sell-off came after the Biden administration threatened to impose tough limits on foreign chipmakers’ exports to China and after former President Donald Trump rattled markets by suggesting Taiwan should help the U.S. fund its defense against Chinese aggression.
Shares of Taiwan Semiconductor Manufacturing Co. (TSMC) fell more than 2% in trading on Thursday, even as the company said it expects third-quarter sales to rise by as much as 34% on rising demand.
The chipmaker lost more than $52 billion in market capitalization this week.
Shares in U.S.-based Nvidia, which had soared to record highs in recent weeks, were flat on Thursday after plunging more than 9 percent since Monday. Japanese chipmaker Tokyo Electron fell 8.75 percent. Dutch company ASML also traded flat after falling more than 10 percent the previous day.
The tech-heavy Nasdaq index fell nearly 200 points, or more than 1%, in Thursday trading after plummeting more than 500 points the previous day.
The Philadelphia Semiconductor Index, which tracks stocks such as Nvidia, TSMC and Intel, lost nearly $500 billion in market capitalization on Wednesday alone. According to the FT:.
The Biden administration has warned allies that it could impose tough trade restrictions on foreign chipmakers such as Japan’s Tokyo Electron and the Netherlands’ ASML if they continue to sell advanced chips to China. Bloomberg reported.
The move signals that the Biden administration is stepping up efforts to block Chinese access to advanced chips needed to power artificial intelligence amid rising tensions between Washington and Beijing.
In July, The Wall Street Journal reported. Despite the Biden administration’s efforts, a network of buyers and sellers was smuggling advanced Nvidia chips into China, the report said.
Meanwhile, Trump has angered semiconductor investors. He told Bloomberg Businessweek: Taiwan argued that it should “share our defense costs” because it had “taken over about 100 percent of our semiconductor business.”
Taiwan is the world’s main manufacturing base for advanced microchips, producing 92 percent of the global supply, according to data compiled by the Semiconductor Industry Association.
“Taiwan took our semiconductor business. How stupid of us. They took all of our semiconductor business,” Trump told the outlet. “They have a ton of wealth. We see it as no different than an insurance policy.”
Despite the broad sell-off, investor concerns that geopolitical tensions will hurt the tech sector may be overblown, according to Wedbush analyst Dan Ives, who described the situation as a “great buying opportunity.”
“Since 2016, when the Nasdaq was at 5,000, 1,000 and 15,000, the bears yelled China and geopolitical concerns, and they will yell them again as we believe tech stocks will rally through year-end and 2025,” Ives said in a client note.
With post wire
