Asia Chipmaker Shares Fall as US Restrict Sales to China
Published: October 12, 2022
The US announced they’d ban American companies from selling chips used in supercomputers and AI to Chinese companies. As a result, Asian chipmakers’ shares dropped after the said mandate.
The new rules, announced last Friday, also target sales from non-American companies that use US equipment. As the global economy slows, demand for technology firms is also decreasing.
Shares of Taiwanese chipmaker TSMC fell over 8% on Tuesday, Tokyo Electron in Japan fell 5.5%, and Samsung Electronics in South Korea fell 1.4%.
The drops occurred after stock markets in Japan, South Korea, and Taiwan reopened following public holiday closures on Monday.
In another part of Asia, shares in China’s largest chipmaker, SMIC, dropped 4% in Hong Kong. According to the directives, American companies must apply for a license to supply Chinese chip makers with equipment capable of producing more progressive chips.
Some of the regulations took effect immediately. They represent one of the most significant shifts in US policy toward technology exports to China. The rules, according to Washington, are intended to limit Chinese military and technological advances.
On Monday, the technology-heavy Nasdaq index closed at the lowest level since 2020 in the United States, as shares of chipmakers Advanced Micro Devices, Nvidia, Intel, and Qualcomm dropped.
Lower demand for electronics, from smartphones to computers, has also recently weighed on technology stocks worldwide. Samsung, the largest corporation in the world with a net worth of about $500 billion, warned of a 32% drop in profits on Friday.
Samsung phones rank second in the US. However, the largest smartphone manufacturer globally reported a drop in microprocessor profits as memory chip prices fell due to a worldwide decline in consumer electronics demand.
Si Ying Toh and Sonal Varma, research analysts from the financial company Nomura, said the chip decline suggests a deeper export downturn ahead. Evidence shows that export growth in Asian economies will turn negative in the fourth quarter.