The Philadelphia Semiconductor Index fell 5.7% on Thursday, its worst session since mid-June,following the announcement that China is considering a set of new government policies to develop its domestic semiconductor industry and counter recent restrictions by the Trump administration. The drop reduced the gauge’s value by about $ 100 billion.
Major chipmakers had one of their worst days in months. The shares of Nvidia Corp. fell 9.3%, the most since March 16. Broadcom Inc. fell 6.1%, Qualcomm Inc. fell 5.5% and Intel Corp. 3.6%.“If you were to ask me now what has been my biggest fear for most of August is the growing tensions between the United States and China,” said Arthur Hogan, chief market strategist at National Securities Corp. around the so-called phase one trade talks and China buying more of our agricultural products, but it’s a lot more around what we actually do in real life – we’re starting a technological cold war.
Semiconductors are key to Beijing’s technology goals. The government is therefore preparing broad support to develop so-called third-generation semiconductors for the five years to 2025, Bloomberg News reported. The move comes as the Trump administration threatens to cut China’s overseas supplies.
The US government has blacklisted dozens of Chinese tech companies to prevent them from buying US parts. He also instituted bans on TikTok from ByteDance Ltd. and WeChat of Tencent Holdings Ltd. and sanctioned Huawei Technologies Co.
China’s reaction to these restrictions comes as no surprise, Hogan said.
When the world’s two largest economies clash, he said, “it’s hard to rationalize the benefits that come with it.”
– With the help of Sarah Ponczek
(Updates with daily drops in the second and third paragraph)