US stocks slid on Wednesday as the rotation out of high-flying technology shares continued.
The S&P 500 traded 1% lower, while the Nasdaq Composite slid 1.6%. The Dow Jones Industrial Average shed 42 points, or 0.1%.
Shares of semiconductor stocks tumbled in morning trading on Wednesday amid reports of possible tighter restrictions on supply of advanced technology to key market China and comments on Taiwan from Republican presidential nominee Donald Trump.
The U.S. has told allies it is considering using the most severe trade curbs available if companies continue giving Beijing access to advanced semiconductor technology, Bloomberg News reported on Tuesday.
U.S.-listed shares of the Dutch chipmaking equipment provider ASML Holding fell about 9% despite beating second-quarter profit estimates following the report.
Restrictions already in place have dented U.S. chipmakers' sales to China. Nvidia's revenue from China stood at about 18% of its total revenue in the quarter ended April 28, compared to 66% in the year-ago period.
Shares of AI heavyweight Nvidia fell close to 4% in morning trading. Smaller rival AMD shed 4.8%, Qualcomm fell 5%, and Arm Holdings were down about 6%.
Amplifying the worries, former U.S. President Donald Trump told Bloomberg Businessweek that Taiwan should pay the U.S. for its defense as it does not give the country anything, sending TSMC's U.S.-listed shares down 6%.
TSMC is the dominant maker of advanced chips used in everything from AI applications to smartphones and fighter jets, and analysts believe any conflict over Taiwan would decimate the world economy.
Chip stocks have rallied this year as investors bet on generative artificial intelligence and the hardware that supports it. Nvidia's shares have more than doubled in value so far this year while AMD has gained about 20%.