Biden Administration's Plan to Tighten Chip Exports to China: Impact on Semiconductor Stocks and Global Supply Chains

Taipei, Taiwan Taiwan, Province of China[a]
Biden administration planning to tighten chip exports to China
Impact on major chip stocks such as TSMC, Tokyo Electron and ASML Holding NV
Proposed restrictions could lead to supply-chain disruptions, increased production costs, and delays in product development and delivery
Reported measures part of broader strategy to curb China's access to advanced semiconductor technology
Biden Administration's Plan to Tighten Chip Exports to China: Impact on Semiconductor Stocks and Global Supply Chains

In a significant development for the semiconductor industry, the Biden administration is reportedly planning to tighten restrictions on chip exports to China. This news, first reported by Bloomberg citing people familiar with the matter, has sent shockwaves through the market.

Following the Bloomberg report, shares of major semiconductor companies took a nosedive, with NVIDIA Corporation NVDA dropping 6.6%, Advanced Micro Devices, Inc. AMD declining 10.2%, Micron Technology, Inc. MU falling 6.3% and Marvell Technology, Inc. MRVL plunging 10.2%. One-Year Price Performance

Zacks Investment Research

Image Source: Zacks Investment Research The Biden Administration's Plan The proposed measures are part of a broader strategy to curb China's access to advanced semiconductor technology, which is deemed critical for both commercial and military applications. One key component of the plan involves the Foreign Direct Product Rule (FDPR), a regulation that allows the United States to control the sale of products made using American technology, regardless of where they are manufactured. The heightened restrictions could lead to supply-chain disruptions, increased production costs, and delays in product development and delivery. These restrictions could also accelerate China's efforts to achieve semiconductor self-sufficiency, as the Chinese government has been investing heavily in its domestic semiconductor industry. According to analysts, if the Biden administration follows through with these plans, it could significantly impact major chip stocks such as TSMC (TSM), Tokyo Electron and ASML Holding NV. In response to the news, shares of these companies experienced significant declines on Wednesday.

As a result of the proposed restrictions and their potential impact on global supply chains, investors are urged to closely monitor developments in this area. It is also recommended that investors seek guidance from financial advisors before making any investment decisions based on this information. In addition, it is crucial for companies in the semiconductor industry to stay informed about any changes in trade policies and regulatory environments that may affect their operations and profitability.


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Confidence

85%

Doubts
  • Are there any specific details about the proposed restrictions?
  • What is the timeline for implementation of these restrictions?

Sources

94%

The overall score is a weighted number that takes into account conflict of interest, bias, deception and other practices that undermine the credibility of the source. It is calculated as:
(Site Conflicts Of Interest + Author Conflicts Of Interest) / 2.0 * 0.2 + ArticleBiasScore * 0.20 + UniquePointsScore * 0.05 + DeceptionScore * 0.20 + ReadabilityScore * 0.05 + FallacyScore * 0.20

A score that takes into consideration the content for flow, interruptions with ads, and overt search engine optimization techniques that makes the content hard to understand

Chip stocks drop on report US plans to tighten China curbs

BBC News Site: https://www.bbc.com/news/world-us-canada-68702081, About Us URL: https://www.bbc.com/aboutthebbc/ João da Friday, 19 July 2024 02:03
  • Unique Points
    • The Biden administration is reportedly planning to tighten restrictions on exports of semiconductor equipment to China.
    • TSMC lost 2.4% and Tokyo Electron was down by around 8.8% in Asia.
    • ASML, which makes chip making machines, tumbled by almost 11% in Europe.
    • The US Commerce Department previously restricted exports to China of advanced semiconductors used in artificial intelligence technology.
    • Taiwan produces most of the world’s advanced chips.
  • Accuracy
    • Nvidia closed 6.6% lower and AMD lost more than 10% in New York.
  • Deception (100%)
    None Found At Time Of Publication
  • Fallacies (90%)
    The article contains some instances of appeals to authority and potential dichotomous depictions, but overall the author's assertions are mostly factual and do not contain any egregious fallacies. The author quotes experts in the field to provide context and analysis on the situation, which is a valid use of an appeal to authority. However, there is a potential for dichotomous depiction in the statement 'despite these comments, the long term business trend for the semiconductor industry is clearly going up.' This statement could be interpreted as implying that there are only two possibilities: either investors should be concerned about the US restrictions on China and Taiwan, or they should ignore those concerns and focus on the long-term growth of the semiconductor industry. However, this is not an explicit dichotomy, as there may be other factors to consider as well. Overall, I found no fallacies that would significantly impact the score.
    • ][Bob O’Donnell] Regardless of the outcome of the elections... I think we will see the US increase some of the restrictions[[/](Appeal to Authority)]
    • [ASML and Tokyo Electron declined to comment when contacted by BBC News.]
  • Bias (95%)
    The author reports on the potential tightening of US restrictions on exports of semiconductor equipment to China and its impact on chip stocks around the world. While reporting facts, the author does not express any bias towards or against any particular side. However, there is a disproportionate number of quotes from Bob O'Donnell and Marco Mezger that reflect their opinions on the situation. This could potentially skew readers' perception of the issue, but it does not necessarily indicate bias on the part of the author.
    • How far they will take it, though, is the big question.
      • Investors always react to any remarks from the US
        • Regardless of the outcome of the elections... I think we will see the US increase some of the restrictions
        • Site Conflicts Of Interest (100%)
          None Found At Time Of Publication
        • Author Conflicts Of Interest (100%)
          None Found At Time Of Publication

        89%

        The overall score is a weighted number that takes into account conflict of interest, bias, deception and other practices that undermine the credibility of the source. It is calculated as:
        (Site Conflicts Of Interest + Author Conflicts Of Interest) / 2.0 * 0.2 + ArticleBiasScore * 0.20 + UniquePointsScore * 0.05 + DeceptionScore * 0.20 + ReadabilityScore * 0.05 + FallacyScore * 0.20

        A score that takes into consideration the content for flow, interruptions with ads, and overt search engine optimization techniques that makes the content hard to understand

        Stock market news today: Dow falls 500 points, Nasdaq slides as tech rout continues

        Yahoo Finance Karen Friar Friday, 19 July 2024 02:04
        • Unique Points
          • Republican nominee Donald Trump’s potential presidency could move markets due to key Democratic leaders reviving talk of an exit for President Joe Biden who has come down with COVID-19.
        • Accuracy
          • The tech-heavy Nasdaq Composite fell more than 0.7% on Thursday.
          • The Dow Jones Industrial Average slipped more than 1%, or nearly 550 points.
          • TSMC beat on profit with a 36% jump in the latest quarter.
        • Deception (100%)
          None Found At Time Of Publication
        • Fallacies (85%)
          The article contains a few informal fallacies and inflammatory rhetoric. It uses loaded language such as 'broadened sell-off', 'worst day since 2022', and 'all-time closing record'. Additionally, it makes an appeal to authority by mentioning TSMC's strong quarterly earnings temporarily lifting the mood. No formal logical fallacies are present in the text.
          • The tech-heavy Nasdaq Composite (<sup>IXIC</sup>) fell more than 0.7%...
          • ...a potential escalation in US curbs on exports to China...
          • Chip stocks Nvidia (NVDA), TSMC, and ASML (ASML) all got hammered...
        • Bias (100%)
          None Found At Time Of Publication
        • Site Conflicts Of Interest (100%)
          None Found At Time Of Publication
        • Author Conflicts Of Interest (100%)
          None Found At Time Of Publication

        90%

        The overall score is a weighted number that takes into account conflict of interest, bias, deception and other practices that undermine the credibility of the source. It is calculated as:
        (Site Conflicts Of Interest + Author Conflicts Of Interest) / 2.0 * 0.2 + ArticleBiasScore * 0.20 + UniquePointsScore * 0.05 + DeceptionScore * 0.20 + ReadabilityScore * 0.05 + FallacyScore * 0.20

        A score that takes into consideration the content for flow, interruptions with ads, and overt search engine optimization techniques that makes the content hard to understand

        Chip Stocks Sell-Off Fuels Calls To Buy the Dip

        Investopedia Friday, 19 July 2024 02:05
        • Unique Points
          • Analysts suggest investors can 'buy the dip' in chip stocks due to potential growth from surging AI demand.
          • Bank of America analysts see current volatility as an 'enhanced opportunity' to buy shares of companies like Nvidia.
          • UBS analysts recommend focusing on building long-term exposure to AI, which is expected to be a key driver of equity returns in the coming years.
        • Accuracy
          • Wedbush and Jefferies analysts dismiss geopolitical tensions as 'noise' in the chip companies’ AI story with limited impact.
        • Deception (100%)
          None Found At Time Of Publication
        • Fallacies (100%)
          None Found At Time Of Publication
        • Bias (100%)
          None Found At Time Of Publication
        • Site Conflicts Of Interest (100%)
          None Found At Time Of Publication
        • Author Conflicts Of Interest (0%)
          None Found At Time Of Publication

        94%

        The overall score is a weighted number that takes into account conflict of interest, bias, deception and other practices that undermine the credibility of the source. It is calculated as:
        (Site Conflicts Of Interest + Author Conflicts Of Interest) / 2.0 * 0.2 + ArticleBiasScore * 0.20 + UniquePointsScore * 0.05 + DeceptionScore * 0.20 + ReadabilityScore * 0.05 + FallacyScore * 0.20

        A score that takes into consideration the content for flow, interruptions with ads, and overt search engine optimization techniques that makes the content hard to understand

        Chip Stocks Tumble as US Plans to Tighten China Restrictions

        Yahoo Finance Anirudha Bhagat Friday, 19 July 2024 02:06
        • Unique Points
          • The Biden administration is reportedly planning to tighten restrictions on chip exports to China.
          • The proposed measures aim to curb China's access to advanced semiconductor technology, which is deemed critical for both commercial and military applications.
          • One key component of the plan involves the Foreign Direct Product Rule (FDPR), a regulation that allows the United States to control the sale of products made using American technology, regardless of where they are manufactured.
          • The heightened restrictions could lead to supply-chain disruptions, increased production costs, and delays in product development and delivery.
          • These restrictions could also accelerate China's efforts to achieve semiconductor self-sufficiency, as the Chinese government has been investing heavily in its domestic semiconductor industry.
        • Accuracy
          • Shares of major semiconductor companies have taken a nosedive in response to the news.
          • The proposed measures aim to curb China’s access to advanced semiconductor technology, which is deemed critical for both commercial and military applications.
          • The U.S. government plans to maintain technological superiority and safeguard national security interests by tightening export controls.
        • Deception (100%)
          None Found At Time Of Publication
        • Fallacies (85%)
          The author makes an appeal to authority by citing Bloomberg as the source of the information about the Biden administration's plans to tighten restrictions on chip exports to China. This is not a logical fallacy in and of itself, but it can be seen as a potential weakness if the author relies too heavily on this single source without providing any additional context or evidence.
          • ]The Biden administration is reportedly planning to tighten restrictions on chip exports to China.[/
        • Bias (95%)
          The author expresses no bias in the article. However, there is a disproportionate number of quotes that reflect negatively on the impact of the proposed restrictions on US chip makers. This could potentially be seen as an implicit bias towards these companies and their financial interests.
          • Any disruption in this market can lead to substantial revenue losses for these companies.
            • Following the Bloomberg report, shares of major semiconductor companies took a nosedive, with NVIDIA Corporation NVDA dropping 6.6%
              • The potential disruption in supply chains, coupled with limited access to a lucrative market, poses a significant risk to the growth trajectories of these semiconductor giants.
              • Site Conflicts Of Interest (100%)
                None Found At Time Of Publication
              • Author Conflicts Of Interest (100%)
                None Found At Time Of Publication