Nvidia shares were down more than 6%|Steve Jurvetson|CC BY 2,0
Following a tech stock rally, the S&P 500 and the Nasdaq tumbled yesterday amid plunging microchip shares over reports of tighter US export restrictions and comments by Donald Trump on Taiwan.
Shares of global chipmakers, including Nvidia and TSMC, dropped Wednesday, marking the worst day for the S&P 500 since 2020, as the index lost over $500 billion.
The decline followed a Bloomberg report that says the Biden administration plans to impose strict export restrictions if foreign companies like Tokyo Electron and ASML continue providing China with advanced semiconductor technology.
The plan, under Washington’s foreign direct product rule (FDPR), allows the US to control foreign-made products that incorporate American technology, potentially impacting non-US companies.
Earlier, in a separate chat with Bloomberg, Trump suggested Taiwan should pay the US for its defense and accused Taiwan of taking nearly 100% of America’s semiconductor business, adding to the tension.
The market’s impact was swift. ASML’s Netherlands-listed shares were down 11%, Tokyo Electron’s shares dropped nearly 7.5% in Japan, and TSMC stock declined 2.4% in Taiwan.
Nvidia shares were down more than 6%, Arm’s stock dropped 4.86%, and Applied Materials’ shares dipped 5.24%
TSMC manufactures an estimated 90% of the world’s most advanced chips, which power everything from iPhones to AI models. The situation raises concerns about the US defense of Taiwan amid increasing military activity by China.