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Chip Manufacturer Stocks Fall Globally as Taiwan Tensions Mount: Details

Semiconductor shares fell globally on Tuesday as an anticipated go to by the US House of Representatives Speaker Nancy Pelosi to Taiwan, which China claims as its territory, fueled a recent escalation in tensions between Washington and Beijing.

China views the go to by Pelosi, second within the line of succession to the US presidency and a long-time critic of China, as sending an encouraging sign to the pro-independence camp in Taiwan and has repeatedly warned in opposition to it.

Taiwan is house to the world’s largest producer of semiconductors on contract, Taiwan Semiconductor Manufacturing Co (TSMC). Shares of the corporate closed down 2.4 %, whereas peer United Microelectronics Corp (UMC) fell 3 %.

Taiwanese shares dropped 1.6 %, marking their largest share decline in three weeks, whereas shares in China posted their largest fall in additional than two months as mounting tensions unsettled Asian monetary markets.

“The outlook for trade in Asia is likely to weigh on semiconductors, given how much of the world’s global production comes from Taiwan,” mentioned Michael Hewson, chief markets analyst at CMC Markets UK.

Semiconductor shares globally felt the warmth. Germany’s Infineon declined 2.3 %, whereas Dutch companies ASML, ASMI, and BESI fell between 3 % and 4 %. The US chip shares such as Nvidia, Intel, Qualcomm, and Micron dipped greater than 1 % every in buying and selling earlier than the bell.

“This market reaction is expected following the strong performance of equity markets in July,” mentioned Andrea Cicione, head of technique at TS Lombard in London.

“The longer-term impact is unlikely to be significant unless the situation escalates, which wouldn’t be my expectation right now.”

Pelosi was set to go to the island on Tuesday, three sources mentioned, as a number of Chinese warplanes flew near the median line dividing the Taiwan Strait, a supply advised Reuters.

© Thomson Reuters 2022

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