Tech Stocks Plunge Amid Escalating Sino-US AI Chip War – Investors Panic!

Tech prices fell sharply as the chip war between China and the US got worse and the US put new restrictions in place. TSMC lost $52.13 billion in market value, and other major Asian tech companies also took big hits.

Chip stocks fell sharply in Asia on Thursday, while they started the day slowly in Europe. This happened after news came out that the US was thinking about putting more restrictions on sending advanced chip technology to China.

Taiwan Semiconductor Manufacturing Co (TSMC), the world’s biggest contract chipmaker, has seen its market value drop by about T$1.7 trillion ($52.13 billion) in just two days.

The bad news kept coming in, and Donald Trump’s comments that Taiwan should pay the US for protecting it made things even worse. Shares of TSMC fell 2.4%. TSMC reported better-than-expected earnings on Thursday and said it expects third-quarter sales to rise by up to 34% compared to the same time last year. This comes after the company beat market expectations for the quarter’s net profit. Other big names in Asian tech also lost money. For example, SK Hynix , a South Korean memory chipmaker, fell 3.6%, and Tokyo Electron (, a Japanese tech company, fell 8.75%.

There was a 1.74% drop in the Global X Asia Semiconductor exchange-traded fund, which holds stocks in SK Hynix, Tokyo Electron, TSMC, and Samsung Electronics. This brought the fund’s overall gains for the year down to 16.7%. In Europe, the STOXX 600 index went up 0.2%, but the technology sub-index  went down to its lowest level in six weeks and ended the day 0.37% lower.

US Foreign Direct Product Rule and Its Implications

If a product was made in the United States using American technology, the U.S. government can stop it from being sold, according to a story from Bloomberg News that came out during Asian trading hours on Wednesday. This is called the “foreign direct product rule.”Companies like Tokyo Electron and the Netherlands’ ASML might have to follow certain rules for that to happen.

Investors are getting more and more worried about Washington’s protection of the U.S. semiconductor manufacturing industry, which it sees as strategically important for dealing with China. An analyst at Shinhan Securities in Seoul, Kang Jin-hyeok, said that these worries were stronger than ASML’s recent strong earnings reports. He also said that ASML is a target of the planned U.S. curbs because it sells a lot of things to China.

China has been hard-pressed to get their hands on advanced chip technology by the Joe Biden administration. In October, broad restrictions were put in place to stop the sale of artificial intelligence (AI) processors made by companies like Nvidia.