Chip stocks drop on fears US to toughen China rules

Technology stocks around the world have slumped on fears about the global computer chip industry.The sell-off came after a report that the Biden administration could be set to further tighten restrictions on exports of semiconductor equipment to China.Comments by former US President Donald Trump that Taiwan, the biggest producer of chips, should pay for its own defence added to the concerns.In the US, the tech-heavy Nasdaq index closed 2.7% lower on Wednesday, while chip stocks have also tumbled in Europe and Asia.

Regardless of the outcome of the elections… I think we will see the US increase some of the restrictions said Bob O’Donnell, chief analyst at TECHnalysis Research.

How far they will take it, though, is the big question. In Asia, chip making giant TSMC lost 2.4% on Thursday, while semiconductor equipment maker Tokyo Electron was down by around 8.8%.That came after Nvidia closed 6.6% lower in New York on Wednesday, while AMD lost more than 10%.In Europe, shares in ASML, which makes chip making machines, tumbled by almost 11%.The falls came after Bloomberg News reported on Wednesday that the US government is preparing to impose its tightest curbs yet on semiconductor making equipment to China if firms like ASML and Tokyo Electron continue to give the country access to their advanced chip technology.