Asian, European Chip Stocks Fall Over China Export Controls Fears, Trump Remarks — Update

By Mauro Orru

Shares of semiconductor companies across Asia and Europe edged lower Thursday on concerns that the U.S. could further restrict technology exports to China and after Republican presidential candidate Donald Trump brought into question his country's stance on Taiwan's defense.

Taiwan Semiconductor Manufacturing Co., the world's largest contract chip maker, posted a surge in second-quarter profit that far exceeded analysts' forecasts due to strong demand for its advanced chips and enthusiasm over artificial intelligence. However, shares closed 2.4% lower in Taipei.

Strong results were overshadowed by a Bloomberg report Wednesday that Washington could further restrict technology exports to China, a key market for semiconductor companies. Meanwhile, Trump told Bloomberg Businessweek that Taiwan should pay the U.S. for defense, unnerving investors given its role as a major chip-making hub amid tensions with China that claims the self-ruled island as its own territory.

Shares of SoftBank Group, the parent of British chip designer Arm Holdings, closed 6.1% lower in Tokyo, while chip-making equipment maker Tokyo Electron shed nearly 8.8%.

Tokyo Electron's rival in Europe, ASML Holding closed 11% lower on Wednesday after the Bloomberg report that rattled investors over fears that export controls to China would harm ASML's business in a region that accounts for a big share of sales.

However, investors' reaction was overdone, Jefferies analysts write in a note to clients. They said the U.S. probably won't restrict equipment sales but is likely to be more focused on stopping ASML from servicing some high-end equipment in China. However, the impact would be limited as ASML's China services revenue accounts for just 3% of total revenue, they said

Shares were down more than 1% on Thursday despite better-than-expected orders and earnings for the second quarter. Elsewhere in Europe, shares of Infineon Technologies and Apple supplier STMicroelectronics fell nearly 1%.

Write to Mauro Orru at mauro.orru@wsj.com

(END) Dow Jones Newswires

July 18, 2024 07:32 ET (11:32 GMT)

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