Get Fully Briefed with Yahoo Finance, delivered straight to your inbox.
(Bloomberg) — Shares of semiconductor companies fell Monday, with the industry selling off globally after fresh US curbs on China’s access to American technology added to a disappointing start to the earnings season, stoking concern that the industry’s downturn is far from over.
The Philadelphia Stock Exchange Semiconductor Index fell 1.4%, building on Friday’s decline of 6.1%. The index is down more than 40% thus far this year. Semiconductor capital equipment companies led the day’s declines, with Applied Materials Inc. down 4.1%, Lam Research Corp. off 6.3% and KLA Corp. down 3.1%. Advance Micro Devices Inc. dropped 3.1% while Marvell Technology Inc. shed 4.9%.
US-listed shares of chip-equipment maker ASML Holding NV fell 0.9% and Chinese bellwether Semiconductor Manufacturing International Corp. fell 4% in Hong Kong, the most in five weeks. Declines were steeper in smaller stocks.
The US measures include restrictions on the export of some types of chips used in artificial intelligence and supercomputing, and also tighter rules on the sale of semiconductor equipment to any Chinese company. Separately, the US also added more Chinese firms to a list of companies that it regards as “unverified,” which means US suppliers will face new hurdles in selling technologies to those entities.
“The changes represent a further escalation, and we do not know what China might do in response,” wrote Stacy Rasgon, an analyst at Bernstein. “Potential retaliation remains a risk.”
The new strategy suggests that Washington aims to “freeze in” China at its current level, enabling the US to increase its lead, said Gabriel Wildau, an analyst at advisory firm Teneo Holdings LLC.
Chinese Foreign Ministry spokesperson Mao Ning said Saturday that the measures, which are set to enter into force this month, are unfair and will “also hurt the interests of US companies.” They “deal a blow to global industrial and supply chains and world economic recovery,” she said.
What Bloomberg Intelligence Says
“SMIC’s revenue could grow at a 50% slower pace vs. our expectations in 2023 on the US’s stricter equipment export license requirements, as 48% of its new capacity to be installed by next year is in 28- or smaller nanometer node advanced chip manufacturing.”
— Charles Shum, analyst
Click here for the full research
The new US rules come at a time when the chip industry is already grappling with an ominous start to the earnings season and has gone from a worldwide shortage of chips to a glut in a matter of months due to the boom-and-bust nature of semiconductor demand.
Samsung Electronics Co., the world’s largest memory-chip maker, and PC-processor maker AMD reported results last week that suggested a deeper-than-feared slowdown ahead.
Among smaller chip-related companies, equipment maker ACM Research Inc. plunged 26% in US premarket trading, while its Shanghai-listed subsidiary, ACM Research Shanghai Inc., sank 20%. In Hong Kong, Hua Hong Semiconductor Ltd. fell 9.4% and Shanghai Fudan Microelectronics Group Co. plummeted 20%, the most since July 2020. China’s Will Semiconductor Co. and Maxscend Microelectronics Co. dropped more than 6% each.
The curbs are a “big setback to China” and “bad news” for global semiconductors, Nomura Holdings Inc. analyst David Wong wrote in a note. China’s localization efforts may also be “at risk as it may not be able to use advanced foundries in Taiwan and Korea,” he wrote.
The US Commerce Department has added Beijing Naura Magnetoelectric Technology Co., a subsidiary of Naura Technology Group Co., to its Unverified List, Naura Technology said in a filing. Naura Technology plunged by the daily limit of 10% in China.
To be sure, the intensifying Sino-American tensions could spur Beijing to step up support for homegrown firms in a bid to achieve its goal of becoming an independent chip powerhouse.
The fall in Chinese chip stocks may cast a pall over the sector globally. Markets in Japan, South Korea, Taiwan and Malaysia will get a chance to react on Tuesday as they are closed on Monday.
“This will not only be negative to the Chinese semiconductor industry but also indirectly impact global semiconductor makers’ business opportunities longer term,” Citigroup analysts including Laura Chen wrote in a note.
The VanEck Semiconductor ETF fell 0.6% in the US, suggesting the industry would open in negative territory. Chipmakers have been struggling throughout 2022, with the Philadelphia Semiconductor Index down 40% thus far this year, including a 6.1% decline on Friday.
Broader Chinese equity market also saw declines on Monday after returning from the Golden Week holiday, hurt by a global equities selloff and bleak holiday-spending data that deepened concerns about an economic recovery.
Read: China Stocks Slide as Traders Return From Golden Week Holiday
(Updates to market open.)
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
(Bloomberg) — Chinese stocks slumped to the lowest since April 2020 on their return from the Golden Week holiday, hurt by Sino-American tensions and bleak holiday-spending data that deepened concerns about an economic recovery amid rising Covid cases. The benchmark CSI 300 Index fell 2.2%, led by losses in tech and consumer staples. That’s the biggest post-Golden Week tumble for the benchmark since 2018, when the China-US trade war was at its height.Grim reality faced mainland traders on their
Aussies working in these industries are getting a pay bump this week. Find out if that includes you.
NSW drivers will be able to get $750 cash back under a new scheme. Here’s what you need to know.
New research from CHOICE finds you could save big by downgrading from gold health cover. Here's what you need to know.
Rental prices are skyrocketing to record levels, with a surprising city in the top spot as the most expensive place to rent. This is what you need to know.
The local market is expected to tumble this morning after Wall Street sank over the weekend. This is your Monday morning wrap.
Aussies are being warned to be on the lookout for an email claiming they are eligible for a $750 refund. This is what you need to know.
Millions of Australians are clueless about their own credit score, according to new research. Here’s how to find out what yours is.
A quarter of borrowers are facing mortgage stress as more interest rate rises are expected in 2023.
Tabcorp is investing $33 million to take a 20 per cent stake in a two-year-old sports betting app with social media features that have made it popular with a younger demographic.Launched in May 2020, Dabble has more than 150,000 customers who are able to copy each other's bets, follow punters, comment on wagers and chat in public "banter channels".