Semiconductor stocks around the world slipped yesterday after fresh US curbs on China’s access to American technology added to a disappointing start to the earnings season, stoking concerns that the industry’s downturn is far from over.
In China, bellwether Semiconductor Manufacturing International Corp (SMIC, 中芯國際) fell 4 percent in Hong Kong, the most since Sept. 2, and Hua Hong Semiconductor Ltd (華虹半導體) sank 9.4 percent, while Shanghai Fudan Microelectronics Group Co (上海復旦微電子集團) plummeted 20 percent, the most since July 2020. Will Semiconductor Co (韋爾半導體) and Maxscend Microelectronics Co (卓勝微電子) dropped more than 6 percent each.
In the US, artificial intelligence chipmakers Nvidia Corp and Advanced Micro Devices Inc (AMD) fell more than 1.2 percent in premarket trading. Chip-tool maker Applied Materials Inc dropped 1.2 percent, while peer ASML Holding NV tumbled as much as 3.2 percent in Amsterdam. These declines followed a 6.1 percent drop in the Philadelphia Semiconductor Index on Friday.
Photo: Bloomberg
The US measures include restrictions on the export of some types of chips used in artificial intelligence and supercomputing, and also tighter rules on the sale of semiconductor equipment to any Chinese company.
Separately, the US also added more Chinese firms to a list of companies that it regards as “unverified,” which means US suppliers face new hurdles in selling technologies to those entities.
The new strategy suggests that Washington aims to “freeze in” China at its current level, enabling the US to increase its lead, Teneo Holdings LLC analyst Gabriel Wildau said.
The new US rules come at a time when the chip industry is already grappling with an ominous start to the earnings season and has gone from a worldwide shortage of chips to a glut in a matter of months due to the boom-and-bust nature of semiconductor demand.
Samsung Electronics Co, the world’s largest memorychip maker, and PC processor maker AMD reported results last week that suggested a deeper-than-feared slowdown ahead.
The curbs are a “big setback to China” and “bad news” for global semiconductors, Nomura Holdings Inc analyst David Wong (黃作慶) wrote in a note.
China’s localization efforts might also be “at risk as it may not be able to use advanced foundries in Taiwan and Korea,” he wrote.
Among other stocks, Naura Technology Group Co (北方華創科技集團) plunged by the daily limit of 10 percent in Shenzhen, while Advanced Micro-Fabrication Equipment Inc (中微半導體設備) and ACM Research Shanghai Inc (盛美半導體設備上海) fell more than 16 percent each.
The US Commerce Department has added Beijing Naura Magnetoelectric Technology Co (北京北方華創磁電科技), a subsidiary of Naura in its Unverified List, the company said in a filing.
To be sure, intensifying tensions between the US and China could spur Beijing to step up support for homegrown firms in a bid to become an independent chip powerhouse.
The fall in Chinese chip stocks could cast a pall over the sector globally. Markets in Taiwan, Japan, South Korea and Malaysia have a chance to react on today as they were closed yesterday.
“This will not only be negative to the Chinese semiconductor industry but also indirectly impact global semiconductor makers’ business opportunities longer term,” Citigroup Inc analysts, including Laura Chen (陳佳儀), wrote in a note.
The broader Chinese equity market also saw declines yesterday after returning from the Golden Week holiday, hurt by a global equities selloff and bleak holiday-spending data that deepened concerns about an economic recovery.
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