US Considering Severe Trade Curbs on Semiconductor Technology Amid Market Turmoil

The U.S. is considering tightening trade restrictions on exports of advanced semiconductor technology to China, leading to a dramatic drop in Wall Street’s semiconductor index. The index lost over $480bn in stock market value on Wednesday, marking its worst session since 2022.

Reports of Washington’s potential curbs on semiconductor exports to China sparked a sell-off in chip stocks, exacerbated by comments from Republican presidential nominee Donald Trump suggesting that Taiwan should pay the U.S. for its defense. This caused further declines in chip stocks, with U.S.-listed shares of companies like ASML Holding, Nvidia, and AMD plummeting.

Conversely, companies with chip manufacturing operations in the U.S., such as Intel, GlobalFoundries, and Texas Instruments, saw gains in their stock prices. Analysts believe Intel could benefit from the geopolitical tensions as the company is expanding its manufacturing facilities in the country.

The Biden administration has been actively working to restrict Chinese access to cutting-edge chip technology, with recent restrictions impacting U.S. chipmakers’ sales to China. As tensions continue to rise, experts predict a focus on semiconductors will persist, with potential further export restrictions to China and increased support for domestic chipmakers like Intel.

Despite the uncertainty surrounding Intel’s ability to revitalize its manufacturing business, the company has received significant subsidies from the U.S. government through the Chips Act. Analysts anticipate a continuation of export controls on semiconductors, regardless of the administration in power, with a potential strengthening of these measures under a Trump presidency.