The tech-heavy Nasdaq stock index has deepened its losses after this week’s interventions by US presidential candidates, but analysts played down market jitters over chipmakers, saying the artificial intelligence boom would continue to support demand.
New York’s Nasdaq composite index staged a brief recovery on opening on Thursday but was down 0.7% at the end of the day, after posting its worst day since December 2022 on Wednesday.
The index and chip-related stocks were rattled on Wednesday – with the Nasdaq falling 2.8% – after Bloomberg said the Biden administration was considering limiting Chinese access to semiconductor technology.
Donald Trump compounded concerns over political risk by telling the same news organisation that Taiwan, a hub for the global chipmaking industry, should pay for its own defence – at a time when fears of a Chinese invasion or blockade are rising.
The US market concerns fed into Asian stocks, with Taiwan Semiconductor Manufacturing (TSMC), the world’s largest contract chipmaker, falling by 2.4% on Thursday. Tokyo Electron shares fell by 8.8% on Thursday, while the Japanese precision tools maker Disco Corp sank by 8.8% and Lasertec, which makes equipment for inspecting for defects in computer chips, shed 6.3%.
ASML, the Dutch maker of chip manufacturing equipment and a key player in the industry, fell a further 3.9% on Thursday.
However, TSMC beat second quarter revenue and profit expectations in results issued after markets closed on Thursday as it said AI-related demand was boosting growth. Shares in Nvidia, a key TSMC customer, were up slightly, by 0.6%, on Thursday, while fellow chipmaker Qualcomm was down 1.9% and Intel was up 3.7%.
Dan Coatsworth, an analyst at the London stockbroker AJ Bell, said: “TSMC joins ASML this week in delivering robust figures, yet both companies are seen as vulnerable to a clampdown by the US on the semiconductor industry.
“Joe Biden seems intent on making it harder for China to access foreign chip technology, while Donald Trump has upset US relations with global semiconductor hub Taiwan. Geopolitical tensions have acted as a stark reminder to investors that even the hottest of all investment trends can meet bumps in the road.”
Analysts said chipmaker stocks should be able to shrug off geopolitical concerns.
David Harold, an analyst at Jon Peddie Research, said the market had been a “bit overheated” on chip stocks but he was not expecting Wednesday’s “massive dip”. The US is investing heavily in chip manufacturing infrastructure but Harold said there will be “no major geographical shift in chip making any time soon”, as geopolitical fears over China alarm investors.
However, AI-related demand – semiconductors are a key technology in training and operating AI models – will continue, he said, regardless of recent jitters.
“This market response is temporary as the underlying factors influencing these markets remain unchanged and AI will continue to push chip demand,” he said.
Dan Ives, an analyst at Wedbush Securities, said Trump’s “bark will be way worse than the bite if he wins the White House” and investors had overreacted.
Alvin Nguyen, a senior analyst at the tech research firm Forrester, said Nvidia – which last month became the world’s most valuable company – could cope with any hit to Chinese demand related to a Biden clampdown.
“There is enough demand for their products for others to buy what is left over in the short term,” he said.
