The chips were down on Wednesday. Literally.
Semiconductors were summarily shellacked following a Bloomberg report that the Biden administration’s weighing more export curbs in a bid to further curtail Xi Jinping’s access to advanced technology.
Long story short (and the short version’s really all you need here) current restrictions haven’t done enough to stymie China’s efforts to develop better chips. So The White House is mulling “draconian” measures aimed at cutting Beijing off from ASML and Tokyo Electron.
Shares of those two companies plunged, and so did a lot of other names. The SOX was on track for its worst session of 2024.
In fact, Wednesday was on track to be the worst day for the SOX since October of 2022.
Nvidia was down sharply as well, building on losses since last week’s US CPI report triggered a rotation away from big-cap growth winners and into small-caps and beaten down cyclicality. Nvidia shed ~$400 billion in market value since July 10.
It wasn’t just Bloomberg’s (laboriously rendered) reporting on prospective new trade restrictions weighing on semis Wednesday. Remarks from Donald Trump were an albatross too.
In an exclusive interview with Bloomberg Businessweek, Trump suggested Taiwan should pay for US security guarantees. “I don’t think we’re any different from an insurance policy,” he mused, in a set of overtly accusatory remarks.
Taiwan Semi shares careened to one of their worst days ever, falling more than 7% at one juncture.
Trump’s position isn’t exactly surprising. One vector of his foreign policy entails conceptualizing of the US as the most powerful of several mafia families who run the world. He’ll protect you from the other families. But only if you pay him. He’s cartoonishly upfront about that.
In the same interview, Trump painted Taiwan as yet another beneficiary of “stupid” US policy. The island, he claimed, “took” (read: stole) America’s chip business. He also appeared to suggest that defending Taiwan would be a logistical impossibility in the event Xi tries to seize it.
By contrast, Trump said, of his friends in Riyadh, “I’ll always protect them.”
Imo, this is a great price point at which to buy chips.
I have confidence that the CEOs of the US chip manufacturers will use their international relationships to figure out how to sell to an intermediary, if necessary, instead of selling directly to a buyer – who might be prohibited from buying due to export curbs.
Sure glad the murderous thugs of Saud will always be protected, along most likely with those of Russia. We wouldn’t want life to get more challenging for the brotherhood of kleptocrats, now would we?