2 months ago
22
NVIDIA, the third-largest company in the world by market capitalisation, saw its shares fall by over 6%. TSMC, NVIDIA’s primary supplier, dropped more than 7% while shares of Tokyo Electron and Netherlands-based ASML plummeted by 11% and 12% read more
 "NVIDIA stocks slip by 6%, other chipmakers see massive dips as well")
The market's anxiety was compounded by Trump's remarks in an interview with Bloomberg Businessweek, where he suggested that Taiwan should pay the US for its defence. Image Credit: Reuters, Reuters
Global chip stocks took a significant hit on Wednesday, with major players such as NVIDIA, Taiwan Semiconductor Manufacturing Company (TSMC), and ASML experiencing notable declines.
This downturn came amid reports that the Biden administration is considering tighter export controls to restrict China’s access to advanced semiconductor technology. Additionally, comments from former President Donald Trump cast doubt on the US’s commitment to defending Taiwan, further shaking investor confidence.
NVIDIA, the third-largest company in the world by market capitalization, saw its shares fall by over 6 per cent. TSMC, NVIDIA’s primary supplier, dropped more than 7 per cent, while shares of Tokyo Electron and Netherlands-based ASML plummeted by 11 per cent and 12 per cent, respectively. These drops reflect growing concerns over potential regulatory measures.
The Biden administration is reportedly weighing the use of the foreign direct product rule, which would allow the US to exert control over any foreign-made products incorporating American technology. This rule’s potential implementation is part of the administration’s push for allied nations, particularly Japan and the Netherlands, to adopt stricter policies on exporting semiconductor technology to China.
The market’s anxiety was compounded by Trump’s remarks in an interview with Bloomberg Businessweek, where he suggested that Taiwan should pay the US for its defence. Given Taiwan’s crucial role in the semiconductor industry, these comments added to the uncertainty.
Taiwan holds about 92 per cent of the world’s most advanced chip manufacturing capacity, as reported by the US International Trade Commission. TSMC, the leading chip manufacturer globally, is a key supplier for NVIDIA’s H100 GPUs, which are central to the burgeoning AI sector.
NVIDIA’s reliance on TSMC for its chip manufacturing, as NVIDIA does not produce its own chips, underscores the potential impact of any disruptions in the supply chain. The broader implications of the geopolitical tensions and potential regulatory changes are causing significant concern within the industry.
In contrast to the broader market downturn, shares of GlobalFoundries rose by nearly 7 per cent. This increase likely reflects the company’s potential to benefit from efforts to bolster onshore US chip production. As the US seeks to reduce its dependency on foreign semiconductor manufacturing and strengthen its domestic capabilities, companies like GlobalFoundries may see increased investment and support.
Overall, the decline in global chip stocks highlights the semiconductor industry’s vulnerability to geopolitical risks and policy shifts. The potential for stricter US export controls and uncertainties surrounding Taiwan’s defence are creating a volatile environment for companies involved in the global chip supply chain.
The situation remains dynamic, with further market fluctuations likely as the US and its allies navigate their strategies regarding China’s access to advanced technology and the broader implications for international trade and security.
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English (US) ·