Chip Stocks Decline

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Chip Stocks Decline

Chip Stocks Decline On Geopolitical Tension

Top stocks from the US semiconductor sector are under selling pressure amid an increase in geopolitical tension. The recent bout of selling comes as the USA is expected to impose new sanctions on the supply of advanced chips to China.

According to media reports, the US government is thinking about imposing strict restrictions on ASLM and Tokyo Electron Ltd. if they continue to provide advanced chips to China.

Nvidia Down By 7%

This news led to widespread selling in the US chip stocks such as Nvidia, TSM, AMD, and even Broadcom. The most notable were TSM and Nvidia, both of which tumbled by 7%.

Available reports suggest that the USA is really serious about blocking China's access to advanced chip technology. In fact, the USA has already told its allies about the harsh trade restrictions if they continue to provide access to China.

Trade restrictions will be imposed via the FDPR, allowing the USA to control any product containing US-based technology.

The purpose of this move would be to prevent the ASML and Tokyo Electron from winding up or limiting their business in the Chinese territory.

The US officials are already in talks with the Japanese officials about possible measures. They will also convey the outcomes if these chip companies continue their operations in China.

However, these restrictions are also making it difficult for the US companies. A lot of US companies are of the view that these restrictions are unfair and are affecting them. On the other hand, there's little reason for the US allies to alter their trade policies based on US interests.

If these reports turn out to be true, it would deal another blow to the US chips sector which will also translate into losses in the stock market. Now, it remains to be seen whether the US allies will also follow the US policies or continue with their own policies.

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