Chip stocks fall after report of US plans to tighten restrictions on China

Technology stocks around the world fell on concerns about the global computer chip industry.

The sell-off came after a report that the Biden administration may be willing to further tighten restrictions on semiconductor equipment exports to China.

The concerns added to comments by former US President Donald Trump that Taiwan, the world’s largest producer of chips, should pay for its own defence.

In the United States, the technology-heavy Nasdaq closed down 2.7% on Wednesday, while chip stocks also fell in Europe and Asia.

“Regardless of the election outcome… I think we’re going to see the US increase some restrictions,” said Bob O’Donnell, senior analyst at TECHnalysis Research.

“But the big question is how far will they take it?”

In Asia, chipmaker TSMC lost 2.4% on Thursday, while semiconductor equipment maker Tokyo Electron fell about 8.8%.

This came after Nvidia closed down 6.6% in New York on Wednesday, while AMD lost more than 10%.

In Europe, shares of ASML, which makes chipmaking machines, fell about 11%.

The declines came after Bloomberg News reported on Wednesday that the U.S. government is preparing to impose the toughest restrictions yet on semiconductor manufacturing equipment to China if companies such as ASML and Tokyo Electron continue to give the country access to their advanced chip technology.

The US Department of Commerce, ASML and Tokyo Electron declined to comment when contacted by BBC News.

The Biden administration has previously taken steps to restrict China’s access to advanced chip technology.

In October, the United States imposed restrictions on exports to China of advanced semiconductors used in artificial intelligence technology.

Trump’s comments on Taiwan also suggested a potential disruption to global chip supplies.

Taiwan produces most of the world’s advanced chips.

“Investors always react to any comments from the US, but despite these comments, the long-term business trend for the semiconductor industry is clearly heading higher,” said Marco Mezger, executive vice president of memory chip technology company Newmonda.