Global chip stocks fell sharply this week, with ASML, Nvidia and TSMC posting declines amid reports of tighter export restrictions from the U.S. and a ramp-up of geopolitical tensions fueled by comments from former U.S. President Donald Trump.
US Floats Tougher Trade Rules to Rein In China Chip Industry
The Biden administration, facing pushback to its chip crackdown on China, has told allies that it’s considering using the most severe trade restrictions available if companies such as Tokyo Electron Ltd. and ASML Holding NV continue giving the country access to advanced semiconductor technology.
Seeking leverage with allies, the US is mulling whether to impose a measure called the foreign direct product rule, or FDPR, said people familiar with recent discussions. The rule lets the country impose controls on foreign-made products that use even the tiniest amount of American technology.
Such a step — seen by allies as draconian — would be used to clamp down on business in China by Japan’s Tokyo Electron and the Netherlands’ ASML, which make chipmaking machinery that’s vital to the industry. The US is presenting the idea to officials in Tokyo and the Hague as an increasingly likely outcome if the countries don’t tighten their own China measures, according to the people, who asked not to be identified because the deliberations are private.
Trump Says Taiwan Should Pay for Defence, Sending TSMC Stock Down
Taiwan should pay the U.S. for its defence as it does not give the country anything, Republican presidential candidate Donald Trump told Bloomberg Businessweek, sending shares of Taiwanese chip manufacturer TSMC lower.
"I know the people very well, respect them greatly. They did take about 100% of our chip business. I think, Taiwan should pay us for defence," Trump said in interview on June 25 that was published on Tuesday.
"You know, we're no different than an insurance company. Taiwan doesn't give us anything."
TSMC Hikes Revenue Outlook to Reflect Heated AI Demand
Taiwan Semiconductor Manufacturing Co. lifted projections for 2024 revenue growth after quarterly results beat estimates, reflecting its confidence in the longevity of the global AI spending boom.
The chipmaker for Apple Inc. and Nvidia Corp. now expects sales to grow more than the maximum mid-20% it had guided toward previously. For the current quarter, TSMC forecasts revenue of as much as $23.2 billion, above analysts’ projections. And it narrowed its forecast for capital spending to the high end of its outlook to $30 billion to $32 billion, from as low as $28 billion previously.
The revisions underscore TSMC’s view that AI spending will remain elevated despite growing US-Chinese trade tensions. In both countries, startups and tech firms from Microsoft Corp. to Baidu Inc. are splurging on AI infrastructure, largely powered by Nvidia accelerators.
ASML Orders Beat Forecasts Amid AI Chip Boom
ASML Holding posted orders above analysts’ expectations as chip makers rush to get their hands on key production equipment to meet booming demand for artificial intelligence.
The Dutch group, which supplies semiconductor-making machinery to chip makers, booked 5.57 billion euros ($6.07 billion) in orders in the three months to the end of June, up from EUR4.50 billion a year earlier. Analysts had forecast nearly EUR5.04 billion in orders, according to consensus estimates by Visible Alpha.
ASML is riding an AI wave as chip makers are on the hunt for highly complex machines they need to produce increasingly sophisticated semiconductors to power artificial-intelligence features in smartphones, laptops, electric vehicles and data centers.
OpenAI Holds Talks with Broadcom About Developing New AI Chip
ChatGPT maker OpenAI is in discussion with chip designers, including Broadcom, about developing a new artificial intelligence chip, the Information reported on Thursday, citing people familiar with the matter.
OpenAI is exploring the idea of making AI chips on its own to overcome the shortage of expensive graphic processing units that it relies on to develop AI models such as ChatGPT, GPT-4, and DALL-E3.
The Microsoft-backed company is hiring former Google employees who produced the online search giant's own AI chip, the tensor processing unit, and has decided to develop an AI server chip, the report added, citing three people who have been involved.
Samsung Restarts Talks With Union as Chip Plant Strikes Persist
Samsung Electronics Co. has agreed to resume negotiations with the union organizing strikes across its chipmaking plants, as the unprecedented labor action threatens to extend into a third week.
Executives from Korea’s largest company will meet with union leaders on Friday to discuss a framework and schedule for wage negotiations, according to Samsung and union representatives.
The string of walkouts and protests this month marked the biggest and most widespread labor protests in Samsung’s half-century history. Samsung’s largest union, comprising more than 30,000 members, called on employees to walk off the job at an advanced AI memory chip plant alongside other factories around Seoul, switching tactics after a campaign for higher pay showed signs of losing steam.
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