Semiconductors slump amid export curb control fears, Trump's Taiwan comments
Jul. 17, 2024 7:45 AM ET
By: Chris Ciaccia, SA News Editor
 Monty Rakusen
Semiconductor stocks slumped in premarket trading on Wednesday after it was reported the U.S. government may impose further export curb controls on the industry and former President Trump questioned whether the U.S. should pay for Taiwan's defense.
The U.S. government is thinking of imposing the most severe trade curbs available if companies including ASML (NASDAQ: ASML) continue to provide China access to advanced semiconductor technology, Bloomberg News reported, prior to ASML publishing its second-quarter results.
ASML reported that its second-quarter came in stronger-than-expected, but its outlook for the third-quarter was below Wall Street's forecast. Net bookings for the second-quarter surged about 54% sequentially to €5.57B ($6.1B), beating estimates. Net bookings rose approximately 24% year-over-year.
Net bookings for ASML's extreme ultraviolet lithography machines in the second-quarter were €2.5B, well above the €656M seen in the prior quarter.
Revenue for the quarter fell approximately 9.5% year-over-year to €6.24B. China accounted for 49% of the total net system sales during the period.
Looking ahead, ASML expects third-quarter sales to be between €6.7B and €7.3B, below the €7.5B estimate.
ASML shares sank 7% in premarket trading.
Other semiconductor equipment stocks also fell on back of ASML's results and outlook, including Lam Research ( LRCX), Applied Materials ( AMAT) and KLA Corp. ( KLAC), all of which fell 4% or more.
Trump on TaiwanTaiwan Semiconductor (NYSE: TSM) shares fell nearly 5% after former President Trump told Bloomberg Businessweek that Taiwan "should pay us for defense."
“You know, we’re no different than an insurance company. Taiwan doesn’t give us anything,” the former President added.
Taiwan has repeatedly received military assistance from the U.S. in the form of weapons sales. Legislation providing military aid to the country was also recently passed, amid fears of a potential invasion by China.
Taiwan Semiconductor is the leading global semiconductor foundry, with 62% as of the first quarter, according to Counterpoint Research. It makes chips for a wide range of companies, including Apple ( AAPL), Nvidia (NASDAQ: NVDA), AMD ( AMD), Qualcomm ( QCOM) and others.
Nvidia shares sank 4% in premarket trading, while AMD fell 4.6%. Other semiconductor stocks also fell on Wednesday, including Qualcomm, Broadcom ( AVGO) and Micron ( MU), which fell 4.5%, 3.5% and 4%, respectively.
Arm Holdings ( ARM), which has gained nearly 160% year-to-date, also tumbled 4% in premarket trading. Arm licenses its intellectual property to many of the aforementioned companies for their respective uses.
Intel ( INTC) and Global Foundries ( GFS), which compete with Taiwan Semiconductor in the foundry market, fell 0.6% and 1.3%, respectively. |
