Today's downturn in Taiwan Semiconductor's share price can be attributed to...
Today's downturn in Taiwan Semiconductor's share price can be attributed to...
TSM's shares experienced a dip today following news from Reuters that the U.S. Commerce Department ordered an immediate halt on the company's delivery of advanced chips to China, impacting their stock which dropped by 3.56% at 4 p.m. ET.
The U.S. tightens control on chip exports to China
The American administration has been vigilant in limiting the export of advanced processors to China, especially those intended for use in artificial intelligence (AI). However, some chips have managed to bypass these restrictions. A recent incident involving one of TSM's chips being used in a Huawei AI data center became a point of contention, as Huawei is a Chinese company under trade sanctions.
TMSC has been in close contact with the U.S. government and, earlier today, received a letter from the Commerce Department, urging them to halt shipment of their 7-nanometer and other advanced chips to Chinese companies.
The U.S. and China are in a race for AI dominance, and the U.S. is wary of allowing China to utilize advanced chips in its military capabilities, leading to restrictions on chip sales to China.
It's not just TSM that is impacted by these restrictions, as other tech giants such as Nvidia and Advanced Micro Devices have also adjusted their semiconductor shipments to China.
Potential turbulence for TSM stock due to China
Considering that 11% of TSM's Q3 revenue came from China, it's unlikely that a reduction in sales to Chinese companies will significantly impact the company's growth. But investors should remain vigilant when it comes to escalating tensions between the U.S. and China, as any further geopolitical instability may negatively impact TSM's stock.
Investors may want to reconsider their strategies for investing in TSM, given the ongoing tensions between the U.S. and China, as the finance sector often takes cues from geopolitical developments. The tightening of control on chip exports to China could potentially impact TSM's financial performance due to its reliance on sales to Chinese markets.