Chip stocks lose half a trillion dollars as tensions between US and China escalate

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Lerato Khumalo

The world’s biggest chip companies lost half a trillion dollars in value in a day after the U.S. planned more export restrictions on semiconductor technology sent to China and Republican presidential candidate Donald Trump made harsh comments about major chipmaker Taiwan.

Companies that produce chips used in many areas of life such as smartphones, computers, automobiles, defense technologies and white goods are negatively affected by the tension between the US and China.

The latest step in escalating tensions between the two countries is U.S. President Joe Biden’s administration’s plans to impose the toughest possible trade restrictions on allies if companies continue to give China access to advanced semiconductor technology.

Chip markets were shaken after the U.S. administration sent a message that it was “considering the most severe trade restrictions if companies such as Tokyo Electron and ASML Holding NV continue to provide China with access to advanced semiconductor technology.”

On the same day, Republican Party presidential candidate and former US President Donald Trump’s harsh comments about Taiwan, the world’s largest producer of advanced chips, accelerated losses in chip companies’ shares.

Trump said Taiwan had taken over “almost all” of the semiconductor industry in the United States, adding: “They took our entire chip business, they’re very rich. I don’t think we’re any different than an insurance policy.”

Trump said Taiwan was not contributing to the US and should pay the US for defense.

These two statements, which came on the same day, caused a loss of $500 billion in shares of companies operating in the chip industry in one day.

US-listed shares of Dutch chipmaking technology firm ASML fell 11.1 percent yesterday.

Nvidia, a US-based chipmaker focused on artificial intelligence technologies, lost 6.5 percent of its shares yesterday following the two harsh statements. Nvidia, one of the world’s most valuable companies with approximately $3.3 trillion, lost approximately $200 billion following the decline in its shares.

Shares of Taiwan-based semiconductor maker TSMC, which has a market value of over $700 billion, also fell about 8 percent.

Shares of US-based chipmaker AMD fell 10.2 percent.

Shares of US chipmaker Qualcomm, whose market value exceeds $200 billion, fell by 8.6 percent, Micron by 6.3 percent and Broadcom by 7.9 percent.

Shares of British semiconductor and chip design firm ARM Holding, which is traded on US stock exchanges, also fell 9.5 percent.