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【Text/Liu Chenghui of Observer Network】

"Wall Street chip stocks had their worst day of 2020 as concerns about trade restrictions with China stoked fears," Reuters wrote.

On July 17, local time, under the attack of negative "bombs" such as the US government's plan to tighten restrictions on Chinese chips and Trump's remarks on Taiwan, the US semiconductor sector plummeted across the board that day, and the market value evaporated by more than US$500 billion in a single day. ASML ADR fell 12.74%, AMD fell 10.21%, and TSMC ADR fell 7.98%. Nvidia, Microsoft, Apple and other US technology "seven giants" all fell sharply by more than 1%, dragging down the Nasdaq Composite Index to close down 2.8%, setting the largest single-day drop for the Nasdaq since December 2022.

Policy experts analyzed that the US government's attention to the semiconductor industry will not be affected by this year's election, and it will further restrict chip exports to China and vigorously support domestic chip manufacturers such as Intel. Investors are worried that no matter who finally enters the White House, chip stocks will face more challenges brought by trade restrictions.

In response to the US government's insistence on its own way, Bloomberg warned on the 17th that restrictions on Chinese semiconductors have backfired. Not only have they failed to hinder China's development, but they have caused huge losses of billions of dollars to US companies and may even cause more international companies to divest US products to avoid regulations.

Trends of the three major U.S. stock indexes in the past three trading days: Wall Street Journal

According to Reuters and Forbes, as of the close of trading on the 17th, the Nasdaq Composite Index, which is dominated by technology stocks, fell 2.8%, exceeding the 1.4% drop of the S&P 500. At the same time, the Dow Jones Industrial Average, which is a gathering of blue-chip stocks, rose 0.6%.

The "Big Seven" technology companies suffered a comprehensive collapse, resulting in a total market value loss of up to $1.13 trillion in the past five trading days. Among them, Nvidia had the largest decline on the 17th, down 6.6%, and its market value evaporated by about $200 billion; Apple fell 2.5%, "Metaverse" Meta fell 5.68%, Amazon fell 2.64%, Google fell 1.58%, Microsoft fell 1.33%, and Tesla fell 3.14%.

ASML ADR fell 12.74% despite its second quarter profit exceeding expectations. AMD fell 10.21%, TSMC ADR fell 7.98%, Broadcom fell 7.91%, Micron Technology fell 6.27%, and major Korean chipmakers Samsung Electronics and SK Hynix fell 1.9% and 3.9% respectively. Intel rose 0.35%.

Nvidia CEO Jen-Hsun Huang Reuters

Foreign media believe that the overall collapse of chip stocks is related to the negative news that has been exposed recently. The Wall Street Journal reported on the 17th that investors are worried that the chip industry will be affected by the restrictive policies of the US government, and therefore continue to withdraw funds. Investors are also worried that no matter who wins the presidential election in November, chip manufacturers' stocks will face the impact of more US trade restrictions.

On July 16, local time, Bloomberg Businessweek, a subsidiary of Bloomberg News, published an exclusive interview with Trump. Trump said that since all of the US chip business was "robbed" and no benefits were obtained, Taiwan should pay him "defense costs."

Bloomberg News quoted sources on the 17th as saying that the United States is putting pressure on companies in its allies such as Japan and the Netherlands to further tighten restrictions on chip exports to China. According to sources, the United States has also threatened that if companies such as Tokyo Electron and ASML continue to provide advanced semiconductor technology to China, they may face the most stringent trade restrictions from the United States.

Reuters believes that Trump's remarks on Taiwan have exacerbated the sell-off of chip stocks, and the Biden administration's restrictions will further hit US chip manufacturers' sales to China. Nvidia's first-quarter financial report as of April 28 showed that its revenue in China accounted for about 18% of its total revenue, compared with 66% in the same period last year.

Intel is building an advanced semiconductor park in rural Ohio outside Columbus, including two chip factories, on April 3, 2023. IC Photo

Several policy experts said that even if Trump returns to power, the U.S. focus on semiconductors is likely to continue, and even further restrict exports to China and support domestic chip manufacturers such as Intel. Intel has been investing heavily in manufacturing in recent years in the hope of catching up with TSMC's advantages. It is also one of the biggest beneficiaries of the Biden administration's "CHIP Act", from which it received $52.7 billion in subsidies.

Still, experts warn that there is uncertainty about Intel's ability to revive its manufacturing industry, with its foundry division reporting an operating loss of $2.47 billion in the first quarter ended March 30.

Michael Sobolik, a senior fellow for Indo-Pacific studies at the American Foreign Policy Council (AFPC), said, "If elected, Trump may not only impose export restrictions, but also strengthen them. He initiated multiple semiconductor export controls during his first administration and also used the powerful 'Foreign Direct Product Rule' (FDPR) to try to prevent Chinese technology giant Huawei from obtaining chips from abroad."

Bloomberg reported on the 17th that the semiconductor restriction policy on China has caused American companies to lose billions of dollars in revenue. American companies believe that the export restrictions on China have unfairly punished them. Sources revealed that the three major American chip equipment manufacturers, Applied Materials, KLA-Tencor and Lam Research, have repeatedly told American officials recently that the current trade policy of the US government is counterproductive and has harmed the interests of American semiconductor companies, but has not stopped China's development as the US government expected.

At the regular press conference of the Ministry of Foreign Affairs held on July 17, a Bloomberg reporter asked a question about "the United States is pressuring companies in its allies such as Japan and the Netherlands to restrict chip trade with China."

Foreign Ministry Spokesperson Lin Jian responded by pointing out that China has repeatedly expressed its solemn position on the malicious blockade and suppression of China's semiconductor industry by the United States. The United States has politicized, generalized and instrumentalized economic, trade and technological issues, continuously increased chip export controls on China, and coerced other countries to suppress China's semiconductor industry, which seriously undermined international trade rules and damaged the stability of the global production and supply chain, which is not beneficial to any party. China has always firmly opposed this.

Lin Jian expressed the hope that relevant countries would distinguish right from wrong, firmly resist coercion, jointly maintain a fair and open international economic and trade order, and truly safeguard their own long-term interests.

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