Chip stocks fall on report of U.S. plans to tighten restrictions in China

Technology stocks around the world fell on concerns about the global computer chip industry.

The sell-off came after a report that the Biden administration may be ready to tighten restrictions on semiconductor equipment exports to China.

Concerns were heightened by comments by former US President Donald Trump that Taiwan, the world’s largest chip producer, should pay for its own defence.

In the United States, the technology-heavy Nasdaq closed down 2.7% on Wednesday, while chip stocks also fell in Europe and Asia.

“Regardless of the outcome of the election… I think we’re going to see the US increase some restrictions,” said Bob O’Donnell, chief analyst at Technalysis Research.

“However, how far they will take it is the big question.”

In Asia, chip giant TSMC lost 2.4% on Thursday, while semiconductor equipment maker Tokyo Electron fell about 8.8%.

This came after Nvidia closed down 6.6% in New York on Wednesday, while AMD lost more than 10%.

In Europe, shares of ASML, which makes chip-making machines, fell nearly 11%.

The drop came after Bloomberg News reported on Wednesday that the U.S. government is preparing to impose its toughest restrictions yet on semiconductor manufacturing equipment for China if companies such as ASML and Tokyo Electron continue to give the country access to its advanced chip technology.

The US Department of Commerce, ASML and Tokyo Electron declined to comment when contacted by BBC News.

The Biden administration has already taken steps to restrict China’s access to advanced chip technology.

In October, it restricted exports to China of advanced semiconductors used in artificial intelligence technology.

Mr Trump’s comments on Taiwan also suggested a potential disruption to global chip supplies.

Taiwan produces most of the world’s advanced chips.

“Investors always react to any statements from the US, but despite these comments, it is clear that the long-term business trend for the semiconductor industry is on the rise,” said Marco Mezger, executive vice president of memory chip technology company Newmonda.