Chip stocks drop on fears US to toughen China rules
![Chip stocks drop on fears US to toughen China rules](https://cdn.jagonews24.com/media/imgAllNew/BG/2023March/us-china-chip-war-20240718130937.jpg)
Technology stocks worldwide have slumped due to fears about the global computer chip industry. The sell-off was triggered by a report suggesting the Biden administration might further tighten restrictions on exports of semiconductor equipment to China. Former US President Donald Trump's comments that Taiwan, the largest producer of chips, should pay for its own defense added to the concerns.
In the US, the tech-heavy Nasdaq index closed 2.7% lower on Wednesday. Chip stocks also tumbled in Europe and Asia. "Regardless of the outcome of the elections, I think we will see the US increase some of the restrictions," said Bob O'Donnell, chief analyst at TECHnalysis Research. "How far they will take it, though, is the big question."
In Asia, chip-making giant TSMC traded almost 3% lower on Thursday, while semiconductor equipment maker Tokyo Electron was down around 9.5%. Nvidia closed 6.6% lower in New York on Wednesday, and AMD lost more than 10%. In Europe, shares in ASML, which makes chip-making machines, tumbled by almost 11%.
The falls followed a Bloomberg News report on Wednesday that the US government is preparing to impose its tightest curbs yet on semiconductor-making equipment to China if firms like ASML and Tokyo Electron continue to provide the country with advanced chip technology. ASML declined to comment when contacted by the BBC, and Tokyo Electron did not immediately respond to a request for comment. The BBC has also asked the US Commerce Department for a statement.
The Biden administration has previously taken steps to restrict China's access to advanced chip technology. In October, it restricted exports to China of advanced semiconductors used in artificial intelligence (AI) technology. Mr. Trump's remarks on Taiwan also hinted at possible disruption of global chip supplies. Taiwan produces most of the world's advanced chips.
“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,” said Marco Mezger, Executive Vice President of memory chip technology company Neumonda.
Source: BBC