Tech stocks face declines amid deepening China-US chip war

Tech stocks in Asia faced significant declines on Thursday amidst escalating tensions in the China-US chip war.

Reports that the United States is considering stricter controls on exports of advanced semiconductor technology to China triggered volatility across global markets, News.Az informs citing Reuters.

Among the worst hit in Asia were shares of Taiwan Semiconductor Manufacturing Co (TSMC), the world's largest contract chipmaker, which has shed roughly T$1.7 trillion ($52.13 billion) in market value over two days.

Remarks from U.S. Republican presidential nominee Donald Trump that Taiwan should pay America for its defence added to the wave of bad news and sent shares of TSMC down 2.4%.

In its earnings results on Thursday, TSMC said it expects third-quarter revenue to surge by as much as 34% from a year earlier, after posting a quarterly net profit that beat market expectations.

Other technology behemoths in Asia similarly suffered losses, with South Korean memory chipmaker SK Hynix sliding 3.6% and Japan's Tokyo Electron slumping 8.75%.

The Global X Asia Semiconductor exchange-traded fund. which lists SK Hynix, Tokyo Electron, TSMC, and Samsung Electronics among its major holdings, fell 1.74%, reducing gains for the year to 16.7%.

Over in Europe, the STOXX 600 index rose 0.2%, though the technology sub-index fell to a six-week trough and last traded 0.37% lower.

The Bloomberg News report published during Asian trading hours on Wednesday said President Joe Biden's administration was weighing a measure called the foreign direct product rule that allows the U.S. government to stop a product from being sold if it was made using American technology.

That would potentially mean restrictions on companies such as Tokyo Electron and the Netherlands' ASML.

ASML shares ticked up 0.3% on Thursday, reversing some of its more than 10% decline in the previous session despite releasing forecast-beating second-quarter earnings on the same day that showed a rise in artificial intelligence-linked bookings.

Washington's protectiveness towards the U.S. semiconductor manufacturing industry, which it views as strategically important for competing against China, has raised increasing concerns for investors.

News.Az