Normal
As the United States expands restrictions on China
October 11 2022
09:54 AM
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2 minutes
Semiconductor stocks fell on Monday, amid a sell-off in global sector shares following new US restrictions on China’s access to US technology added a disappointing start to the earnings season, raising concern that the industry’s downturn is not yet over.
The Philadelphia Securities Exchange’s semiconductor index fell 3.5% to close at its lowest level since November 2020.
The index has fallen nearly 10% over the past three trading days and is now down more than 40% since the start of the year.
Semiconductor capital equipment companies led the declines Monday, with Applied Materials Inc down 4.1%, Lamm Research Corp. down 6.4% and KLA down 4.7%.
Shares of “Advance Micro Devices” decreased by 1.1%, to close at its lowest level since July 2020, while shares of “Marvel Technologies” fell by 4.8%.
Shares of US-listed ASML Holdings fell 2.9%, and shares of the leading Chinese semiconductor manufacturer fell 4% in Hong Kong, the most in five weeks.
The US measures include export restrictions on some types of chips used in artificial intelligence and supercomputing, as well as stricter rules on the sale of semiconductor equipment to any Chinese company.
Separately, the US has also added more Chinese companies to the list of companies it considers “unverified,” meaning that US suppliers will face new obstacles in selling technologies to those entities.
Chinese Foreign Ministry spokesman Mao Ning said Saturday that the measures, which are due to take effect this month, are unfair and will also harm the interests of US companies. “They deal a blow to global manufacturing and supply chains and to the recovery of the global economy,” she said.
The new US rules come at a time when the chip industry is already struggling with an inauspicious start to earnings season and has moved from a global chip shortage to a glut due to the boom-and-bust nature of semiconductor demand.
Samsung, the world’s largest maker of memory chips, and AMD, the maker of computer processors, announced results last week indicating a deeper slowdown than expected.
Small chip-related companies and equipment maker ACM Research sank 27% in New York trading Monday, while its Shanghai-listed subsidiary, ACM Research Hong Kong, sank 20%. Shares of Shanghai Fudan Micro Electrics fell 20%, the largest decline since July 2020.
Shares of “Nora Technology” fell 10% in China.
And rising Sino-US tensions might certainly motivate Beijing to increase support for domestic companies in an effort to achieve its goal of becoming an independent chip power. The decline in Chinese chip stocks may cast a shadow over the sector globally.
Bloomberg
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