Major computer chip manufacturers like Nvidia and TSMC continued to slump Thursday as warnings from both President Biden and Republican nominee Donald Trump fueled renewed geopolitical concerns among investors.
The selloff occurred after the Biden administration threatened severe restrictions on exports by foreign chipmakers to China, while former President Donald Trump rattled the market by suggesting Taiwan should pay the US to defend against China’s aggression.
Taiwan Semiconductor Manufacturing Company shares fell more than 2% in Thursday trading even as the company said it expects third-quarter revenue to surge by as much as 34% on increased demand.
The chip maker has lost the equivalent of more than $52 billion in market value this week.
Shares of US-based Nvidia, which had soared to record highs in recent weeks, were flat Thursday after plunging more than 9% since Monday. Japanese chipmaker Tokyo Electron sank 8.75%. Dutch firm ASML’s shares were also flat after declining more than 10% the previous day.
The tech-heavy Nasdaq index plunged nearly 200 points, or more than 1%, in Thursday trading — on the heels of plummeting more than 500 the previous day.
The Philadelphia Semiconductor Index, which tracks the likes of Nvidia, TSMC and Intel, lost nearly $500 billion in market value on Wednesday alone, according to the FT.
The Biden administration warned allies that it could implement drastic trade restrictions on foreign chipmakers such as Japan’s Tokyo Electron and Netherlands-based ASML if they continue selling advanced chips to China, Bloomberg reported.
The move suggested the Biden administration is stepping up efforts to block China’s access to the advanced chips required to power artificial intelligence amid heightened tensions between Washington and Beijing.
In July, the Wall Street Journal reported that a network of buyers and sellers were smuggling advanced Nvidia chips to China despite the Biden administration’s efforts.
Elsewhere, Trump rankled chip investors when he told Bloomberg Businessweek that Taiwan “did take about 100% of our chip business” and “should pay us for defense.”
Taiwan is the world’s primary manufacturing hub for advanced microchips and produces 92% of the world’s supply, according to data compiled by the Semiconductor Industry Association.
“Taiwan took our chip business from us, I mean, how stupid are we? They took all of our chip business,” Trump told the outlet. “They’re immensely wealthy. And I don’t think we’re any different from an insurance policy.”
Despite the broad selloff, investor fears that geopolitical tensions will hurt the tech industry may be overblown, according to Wedbush analyst Dan Ives – who described the situation as a “golden buying opportunity.”
“The bears screamed fire in a crowded theater on China/geopolitical worries when NASDAQ was 5k, 10k, 15k since 2016…and will again when we believe tech stocks go higher into year-end/2025,” Ives said in a note to clients.
WIth Post wires
