“Hands Off Our Chips!”
The US has gotten prickly with who can use its chips, banning five Chinese companies from plugging into American circuit boards. It’s a big call, and investors are feeling the weight of it.
Investors in semiconductor companies like AMD and Nvidia rely on the sales of complex circuit-boards for electronics. A hotbed for those sales is China’s supercomputer manufacturers. It’s AMD chips at the robotic heart of machines powering weather forecasts, big data storage, research, and, oh yeah, the development of Chinese military and covert activities. Oh-oh!
With more than one eye on national security, the US Department of Commerce has slammed the door shut on five Chinese supercomputer manufacturers. That leaves US chip makers, especially AMD, fronting the collateral damage. As they lose 5 valued clients along with a chunk of share price, semiconductor investors feel like the latest casualties of US-China tensions.
Last month, it was Huawei in America’s line of fire. The Chinese tech giant is still seen as a weapon against the West, posing questions to security and intensifying beef between nations. Chip-makers Qualcomm and Intel have been sticking up for their big client, but now, another five Chinese firms on that blacklist may prove a step too far for the semiconductor scene.
If these stocks have a solution on the way, it might come out of Japan at this week’s G-20 Summit. Hotly anticipated, President Trump and President Xi will sit-down for a scheduled meeting. Chip investors will watch on, hoping to benefit from a deal that many believe is inevitable. However, many also believe in further trade lockouts, with tariffs descending on the rest of imports. What a week we have ahead!