Chipmakers continue to feel hangover from US export ban
SHARES in chipmakers continued to tumble today, as the sector feel the hangover of Washington’s decision to limit chip exports to China.
Adding fuel to the US-China tech war on Friday, President Joe Biden blocked American firms from selling chips for use in AI and supercomputers in China. He said these curbs were aimed at blocking Chinese military advances and tech.
The politically-charged move sent shares into a frenzy, with US semiconductors losing a combined $240bn in market value globally since it was first announced.
Hong Kong’s Hang Seng index fell 1.7 per cent today, tumbling to its lowest point in over a decade, dragged down by fallers like SMIC.
Taiwan Semiconductor Manufacturing, the largest contract chipmaker in the world, plunged 8.3 per cent, whilst Samsung and Tokyo Electron dropped 1.4 per cent and 5.5 per cent respectively.
Biden’s move has also had significant ramifications for the tech-laden Nasdaq, which is home to chipmakers Intel, Nvidia, Qualcomm and Advanced Micro Devices.
“The plight of chipmakers is unlikely to reverse any time soon, which is a stark state of affairs. The sector, and Asian companies in particular, have been grappling with supply concerns since the start of the pandemic and this latest development is yet another blow,” lead equity analyst at Hargreaves Lansdown Sophie Lund-Yates told City PM
She added that the “continued hawkish stance” of the Fed around interest rate hikes also added pressure on chipmaker stocks and their higher-growth connotations that make them susceptible to further sell-offs.
The slump in chip stocks also spilled over the currency markets, explained analysts at Swissquote Bank, with currencies of countries that export chips like Korea and Taiwan dropping this week.