Chipmaker stock rout engulfs TSMC, Samsung with $346b wiped out in sector

TOKYO - Chip-related stocks in Japan, South Korea and Taiwan slumped on Tuesday as a move by the Biden administration to curb China's access to US semiconductor technology sparked a sell-off that has wiped out over US$240 billion (S$345.7 billion) from the sector's market value globally.

The United States announced the export curbs on Oct 7, and there have been suggestions that similar actions may be deployed in other countries to ensure international cooperation.

Taiwan Semiconductor Manufacturing Company (TSMC) plunged more than 7 per cent, the most since May 2021, while Samsung Electronics dropped the most in a year. Tokyo Electron lost as much as 5.8 per cent.

Markets in South Korea, Japan and Taiwan were shut on Monday for holidays, when the Philadelphia Stock Exchange Semiconductor Index sank to its lowest close since late 2020 following a two-day rout of more than 9 per cent.

South Korea's won slumped up to 1.6 per cent against the US dollar, and the Taiwan dollar lost 0.7 per cent. Stock benchmarks in the two economies were the worst performers in Asia on Tuesday.

The latest curbs are likely to fuel a knock-on impact across the sector's supply chain and add to a growing list of challenges for technology shares including a hawkish Federal Reserve and tensions across the Taiwan Strait.

"The latest US move would prompt China to move faster in fostering its domestic chip industry," analyst Akira Minamikawa at research firm Omdia said.

Japanese companies should continue trading with Chinese firms with goods that are not restricted because business is business, he added. "But they should be ready for a future - maybe in a decade or two - when they lose all the Chinese customers as a result of the current tension dialling up speed of the Chinese efforts."

The ban is expected to have far-reaching implications. For companies with plants in China - including non-US ones - the rules will create additional hurdles and require government sign-off. South Korea's SK Hynix is one of the world's largest makers of memory chips and has facilities in China - part of a supply network that sends components around the world. Its shares slid 3.5 per cent on Tuesday before paring losses.

The US measures seek to stop China's drive to develop its own chip industry.

The curbs are a big setback to China and bad news for global semiconductors, Nomura Holdings analyst David Wong wrote on Monday. China's localisation efforts may also be "at risk as it may not be able to use advanced foundries in Taiwan and South Korea", he said.

BLOOMBERG