The chip sector collapsed on Friday after U.S. regulators moved to put the brakes on China’s military ambitions by imposing new limits on the semiconductor and AI technologies that can be sold to China.
On Friday, the U.S. Department of Commerce expanded the list of chip technologies that require a license for sale to China. This is basically a euphemism for prohibition when the license is denied, PHLX Semiconductor Index SOX,
It was down about 3% before the news was announced, but about 2 hours later it was down 6%.
It was provided fresh behind the scenes by Advanced Micro Devices Inc. AMD.
Issue a shortfall warning of $1 billion in projected sales to PC customers. Following his MU at Micron Technology Inc.,
Last week, the news that the Street fell short of expectations by about $1 billion has led analysts to question whether 2022’s sudden chip glut will be worse than 2019. AMD’s stock is at 12%. More fell, and Micron shares fell 2%.
read: ‘This is worse than 2019’: Micron faces ‘unprecedented’ supply problems, analysts split if bottoming out
Friday’s drop was just the worst one-day drop for the SOX index since it dropped nearly 6.2% on Sept. 13. In fact, Friday was his third-worst single-day performance of the year for the SOX index, more than his 6.2% drop on June 16.
The Department of Commerce’s new listing joins Nvidia Corp. NVDA’s September list focused on AI technology.
Nvidia shares fell 7% on Friday.
Nvidia’s stock price plummeted last month when it released a list of products that needed a license to sell to China. Primarily the company’s A100 and H100 data center AI technology, which he estimates could hit $400 million in expected third-quarter revenue if licensed. After being denied and cutting Nvidia’s prospects this year not just once or twice, but three times, it was added to the bleedout.
read: Nvidia’s ‘China Syndrome’: Is the Stock Falling?
A ban on chip technology to China is nothing new.A little over two years ago there was a ban focused on the machinery needed to turn silicon wafers into finished chips.Lam Research Corp. LRCX,
KLA Corp. KLAC,
And 2018 was all about Micron and memory chips. Ram shares fell 6% on Friday, while KLA shares fell 5%.
Elsewhere in the sector, shares of Intel Corp. INTC,
Qualcomm shares QCOM,
Down 3%, Broadcom Inc. AVGO,
Shares fell 4%. Stock of Texas Instruments Inc. TXN,
The largest U.S. supplier of automotive chips, down 4%.
read: AMD shows the end of the PC boom could hit chipmakers harder than expected
Regarding third-party fabs that manufacture silicon wafers that become microchips, Taiwan Semiconductor Circuit Manufacturing Co., Ltd. TSM’s share,
Shares fell 5%, GlobalFoundries Inc. GFS,
Stocks fell 6%. Shares of Marvell Technology Inc. MRVL,
Data center forecasts were disappointing in August, dropping 11%.
The SOX index is down 40% over the year, AMD and Nvidia stocks are down nearly 60% in 2022, and the S&P 500 index SPX led the plunge.
fell 24%, while the tech-heavy Nasdaq Composite Index COMP
decreased by 32%.
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