Following a tech selloff on Wall Street, chip stocks in Asia took a hit on Thursday amidst reports of potential tighter export restrictions from the U.S. The world’s biggest chip supplier, Taiwan Semiconductor Manufacturing Company, saw its shares fall by as much as 4.3% in Asia trade. This decline was echoed in the stocks of TSMC’s suppliers such as Japanese machinery companies Tokyo Electron and Screen Holdings, which slumped by almost 9% and more than 8% respectively. Other chip-related stocks like Tokyo Ohka Kogyo and Organo also experienced losses, dropping by 4.53% and 3.13% respectively.
South Korean chip stocks did not escape the sell-off, with Samsung Electronics sliding by nearly 2%, while SK Hynix tumbled by nearly 5% and SK Square plunging by nearly 10%. The overall sentiment in the Asian chip market was bearish as investors grappled with the news of potential export restrictions and their implications for the industry.
Despite the short-term negative impact on chip stocks, some analysts believe that there are still buying opportunities for long-term investors. Ayako Yoshioka, a senior portfolio manager at Wealth Enhancement Group, emphasized the importance of focusing on the long-term promise of artificial intelligence and its potential benefits for businesses and consumers. While policy hurdles and earnings expectations may create short-term pressures on stocks, Yoshioka remains optimistic about the future prospects of chip companies.
The decline in Asian chip stocks was exacerbated by large losses on Wall Street, particularly from companies like ASML and Nvidia, which saw declines of 12% and 7% respectively. ASML Holdings, a key player in the production of advanced chips, closed more than 12% lower despite reporting better-than-expected second-quarter earnings. Other tech giants like Arm, AMD, Marvell, Qualcomm, and Broadcom also ended the trading day significantly down as investors reacted to the news of potential export restrictions.
The uncertainty surrounding export restrictions was further fueled by political statements, with U.S. Republican presidential candidate Donald Trump suggesting that Taiwan should pay the U.S. for defense and blaming Taiwan for taking a significant share of America’s chip business. These comments added to the overall market jitters and contributed to the negative sentiment surrounding Asian chip stocks.
The recent tech selloff and reports of tighter export restrictions have had a significant impact on chip stocks in Asia. While short-term challenges may persist due to policy hurdles and earnings expectations, some analysts remain bullish on the long-term potential of the chip industry. It is essential for investors to carefully evaluate these developments and consider the broader implications for the market before making investment decisions in the tech sector.