Chip stocks in Asia plunged on Thursday, following a significant sell-off on Wall Street triggered by reports that the United States was considering tighter restrictions on exports of advanced semiconductor technology to China.
Among the hardest hit was Taiwan Semiconductor Manufacturing Co (TSMC) (2330.TW), the world’s largest contract chipmaker, which lost approximately T$2 trillion ($61.35 billion) in market value over two days. TSMC, set to announce earnings later on Thursday, faced a double blow from the U.S. export curbs and comments by U.S. Republican presidential nominee Donald Trump suggesting Taiwan should contribute financially to U.S. defense.
TSMC’s shares fell more than 3%, mirroring declines seen in other tech giants like South Korea’s Samsung Electronics (005930.KS) and SK Hynix (000660.KS), down 1.85% and 4.1% respectively, and Japan’s Tokyo Electron (8035.T), which plummeted more than 8%.
The Global X Asia Semiconductor ETF (3119.HK) dropped 2.7%, reducing its year-to-date gains to 13.5%. A Bloomberg News report on Wednesday indicated that the Biden administration was considering implementing the foreign direct product rule, which could potentially restrict sales of products made using American technology, impacting companies such as Tokyo Electron and Netherlands’ ASML (ASML.AS).
TSMC’s American Depository Receipts fell 8% on Wednesday. In its first-quarter earnings report, TSMC highlighted that 69% of its revenue came from North American customers, with 9% from China.
Washington’s protective stance towards the U.S. semiconductor industry, seen as crucial in global competition with China, has heightened investor concerns. “It seems macro and geopolitical factors played a bigger role than fundamentals,” commented Kang Jin-hyeok, an analyst at Shinhan Securities in Seoul.
