US-China chip war wipes out $240 billion as stocks plunge; TSMC slips 8.3%

Asia’s top chip stocks tumbled Tuesday, ensnared in an escalating US-China tech race that has erased more than $240 billion from the sector’s global market value.

Taiwan Semiconductor Manufacturing , the world’s largest contract chipmaker, plunged a record 8.3 per cent  while Samsung Electronics and Tokyo Electron also declined. The selloff spread to the foreign-exchange market as investors tally up the damage from the sweeping curbs the US is imposing on companies that conduct technology business with China.

Samsung lost as much as 3.9 per cent, the most in a year. South Korea’s SK Hynix, one of the world’s largest makers of memory chips that has facilities in China — is part of a supply network that sends components around the world. Its shares slid 3.5 per cent before paring losses.

The Biden administration measures erect barriers of entry to China’s market by limiting the ability of US firms to sell equipment and tech to their Chinese counterparts. There are concerns that the restrictions could spread if Washington widens the initiative to include other countries, while questions also remain over the scope and final impact of the moves.

“It is difficult to call a bottom on the performance of the chip sector,” said Gary Dugan, chief executive officer of the Global CIO Office. “The big story is that the West is becoming profoundly more concerned about security around any form of technology. We see no reason to re-enter the sector for the moment despite the profound poor performance.” 

US chip stocks were on track to decline for a third day, with Nvidia Corp., Advanced Micro Devices Inc., Qualcomm Inc. and Texas Instruments Inc. all down more than 1 per cent before the bell.