Reports of tightening U.S. export controls on China and former President Trump’s comments about defending Taiwan have shaken the industry, causing shares in several semiconductor manufacturers to fall over the past two days.
Taiwan Semiconductor Manufacturing Co. (TSMC) shares fell 7.7% from Tuesday’s market close to Thursday’s, but recovered slightly by Thursday afternoon after the company reported better-than-expected second-quarter profits.
ASML Holdings shares fell 13.5% over the same two-day period, while Advanced Micro Devices (AMD) fell 12.3% and Nvidia fell 4.2%.
The industry has been hit hard by the market. Bloomberg reported late Tuesday. The Biden administration is reportedly considering tougher trade restrictions to prevent China from obtaining advanced semiconductor technology.
The administration is reportedly considering introducing a measure called the “foreign direct product rule” that would allow the U.S. to restrict the sale of foreign products that use U.S. technology.
The rules could be used to crack down on deals between Beijing and companies such as Netherlands-based ASML Holdings.
Semiconductor stocks were also hit after President Trump suggested Taiwan should pay more for U.S. defense, casting doubt on longstanding U.S. commitments to protect the self-ruled territory from China.
“Taiwan has taken our semiconductor business,” he said. Bloomberg Businessweek“I mean, how stupid are we? They bought our whole semiconductor business. They have a ton of wealth.”
“We see it as no different than an insurance policy,” Trump added. “Why? Why would we do this?”
Taiwan, a key player in the semiconductor industry, has stepped up military drills and patrols around the island in recent years in the face of an increasingly emboldened China.
Beijing considers Taiwan, which separated from mainland China in 1949, to be part of China and has vowed to seize it by force if necessary.
