Chip Manufacturer Stocks Fall Globally as Taiwan Tensions Mount Ahead of Expected Nancy Pelosi Visit

China views the visit by Nancy Pelosi, a long-time critic, as sending an encouraging signal to the pro-independence camp in Taiwan.

By Reuters | Updated: 2 August 2022 18:13 IST

Chip Manufacturer Stocks Fall Globally as Taiwan Tensions Mount Ahead of Expected Nancy Pelosi Visit

Photo Credit: Reuters

Taiwan is home to the world's biggest manufacturer of semiconductors on contract TSMC

Highlights

US chip stocks such as Nvidia, Intel, Qualcomm dipped more than 1 percent
Chinese warplanes flew close to median line dividing the Taiwan Strait
Nancy Pelosi was set to visit Taiwan on Tuesday

Semiconductor stocks fell globally on Tuesday as an expected visit by the US House of Representatives Speaker Nancy Pelosi to Taiwan, which China claims as its territory, fueled a fresh escalation in tensions between Washington and Beijing.

China views the visit by Pelosi, second in the line of succession to the US presidency and a long-time critic of China, as sending an encouraging signal to the pro-independence camp in Taiwan and has repeatedly warned against it.

Taiwan is home to the world's biggest manufacturer of semiconductors on contract, Taiwan Semiconductor Manufacturing Co (TSMC). Shares of the company closed down 2.4 percent, while peer United Microelectronics Corp (UMC) fell 3 percent.

Samsung Wins Patent for a Tri-Fold Smartphone With Specialised Barrier Layer for Improved Durability

Taiwanese stocks dropped 1.6 percent, marking their biggest percentage decline in three weeks, while stocks in China posted their biggest fall in more than two months as mounting tensions unsettled Asian financial markets.

"The outlook for trade in Asia is likely to weigh on semiconductors, given how much of the world's global production comes from Taiwan," said Michael Hewson, chief markets analyst at CMC Markets UK.

Semiconductor stocks globally felt the heat. Germany's Infineon declined 2.3 percent, while Dutch firms ASML, ASMI, and BESI fell between 3 percent and 4 percent. The US chip stocks such as Nvidia, Intel, Qualcomm, and Micron dipped more than 1 percent each in trading before the bell.

TSMC Head Warns Invasion Would Devastate Global Supply

"This market reaction is expected following the strong performance of equity markets in July," said Andrea Cicione, head of strategy at TS Lombard in London.

"The longer-term impact is unlikely to be significant unless the situation escalates, which wouldn't be my expectation right now."

Pelosi was set to visit the island on Tuesday, three sources said, as several Chinese warplanes flew close to the median line dividing the Taiwan Strait, a source told Reuters.

Is Pixel 6a the best camera phone under Rs. 50,000? We discuss this on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

Affiliate links may be automatically generated - see our ethics statement for details.

Comments

For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.