Asia’s top chip stocks tumbled yesterday, ensnared in an escalating US-China tech race that has erased more than US$240 billion from the sector’s global market value.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, plunged a record 8.3 percent, while Samsung Electronics Co and Tokyo Electron Ltd also declined.
The selloff spread to the foreign-exchange market as investors tally up the damage from the sweeping curbs the US is imposing on companies that conduct technology business with China.
Photo: RITCHIE B. TONGO, EPA-EFE
The measures imposed by the administration of US President Joe Biden erect barriers of entry to China’s market by limiting the ability of US firms to sell equipment and tech to their Chinese counterparts. There are concerns that the restrictions could spread if Washington widens the initiative to include other countries, while questions also remain over the scope and final impact of the moves.
“It is difficult to call a bottom on the performance of the chip sector,” Global CIO Office chief executive officer Gary Dugan said. “The big story is that the West is becoming profoundly more concerned about security around any form of technology. We see no reason to re-enter the sector for the moment despite the profound poor performance.”
US chip stocks were on track to decline for a third day, with Nvidia Corp, Advanced Micro Devices Inc, Qualcomm Inc and Texas Instruments Inc all down more than 1 percent yesterday before the bell.
Chip toolmaker ASML Holding NV traded down 2.3 percent in Amsterdam, bringing three-day losses to more than 11 percent.
The US announced the export curbs on Friday and there have been suggestions that similar actions might be deployed in other countries to ensure international cooperation.
The announcement spurred a two-day rout of more than 9 percent in the Philadelphia Stock Exchange Semiconductor Index, which closed on Monday at its lowest level since November 2020.
Samsung lost as much as 3.9 percent, the most in a year, while SK Hynix Inc, one of the world’s largest makers of memory chips that has facilities in China, slid 3.5 percent before paring losses.
In Tokyo, Renesas Electronics Co shed almost 6 percent, with Tokyo Electron losing a similar amount.
The current rout has already wiped out more than US$240 billion from chip stocks worldwide since Thursday’s close, data compiled by Bloomberg showed.
The selloff extended to currency markets, with the South Korean won sliding as much as 1.8 percent versus the greenback while the New Taiwan dollar declined 0.7 percent.
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 on Monday.
China’s localization efforts might also be “at risk as it may not be able to use advanced foundries in Taiwan and [South] Korea,” Wong wrote.
Shares of Chinese chipmakers extended their recent losses yesterday, with Morgan Stanley saying that the broader restrictions around supercomputers and multinational capital investment in China could be “disruptive.”
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
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