2024-07-19 00:15:20
The U.S. stock market, which had surged due to the ‘Trump Trade’ effect, has now been devastated by Republican presidential candidate Donald Trump’s remarks on ‘Taiwan’s defense cost sharing’. The uncertainty in the global financial market is increasing due to candidate Trump’s policy of putting America first. As there are predictions that the existing ‘Chip 4’ semiconductor alliance could be shaken if candidate Trump takes office, global semiconductor companies are feeling a growing sense of crisis.
●Semiconductor stocks plummet one after another due to ‘Trump fears’
On the 17th (local time), the Nasdaq index, which is centered on technology stocks, closed at 17,996.92, down 2.77% from the previous day. It is the largest drop since December 15, 2022 (3.23%). The Nasdaq index has been breaking its all-time high every day since the Trump trade, which has seen money flowing into risky assets since the assassination of candidate Trump on the 13th (local time).
However, the stock prices of semiconductor-related stocks plummeted as Trump’s remarks in the Bloomberg Businessweek interview the previous day poured cold water on investor sentiment. In the interview, Trump claimed that “Taiwan has taken 100% of the U.S. semiconductor business” and that “Taiwan should pay the U.S. for its defense costs.” This is interpreted as a remark targeting Taiwan’s TSMC, the world’s No. 1 foundry (semiconductor contract manufacturing). The market’s shock was even greater because this is the opposite of the Biden administration’s stance of embracing TSMC to maintain the gap in artificial intelligence (AI) technology with China. In addition, the market was further shaken by reports that the Biden administration is also preparing to pressure its allies to join in sanctions against China.
As uncertainty about the semiconductor industry grows, TSMC, listed on the New York Stock Exchange, fell 7.98% from the previous day. Nvidia, a global semiconductor leader and highly dependent on TSMC, also fell 6.62%. Dutch semiconductor equipment companies ASML (-12.74%) and SK Hynix (-3.63%) fell sharply, and the stock price of Japanese semiconductor company Tokyo Electron also fell more than 8%. However, stocks of Intel (0.35%) and Samsung Electronics (0.23%), which are expected to reap windfall profits from the pressure on TSMC, rose.
●Trump risk likely to continue until the presidential election
Trump also expressed discontent with the Biden administration’s “Semiconductor Support Act,” saying, “Taiwan is giving billions of dollars to build new semiconductor factories in the United States.” He attacked allies such as South Korea, Japan, and Taiwan, as well as existing enemy China, for receiving excessive support from the United States. The U.S. Department of Commerce previously announced that it would provide subsidies to domestic companies such as Intel (USD 8.5 billion), TSMC (USD 6.6 billion), and Samsung Electronics (USD 6.4 billion) when they build semiconductor factories in the United States.
Some are also concerned that if Trump takes office, the so-called Chip 4 alliance consisting of South Korea, the United States, Japan, and Taiwan could collapse. Professor Seok Byeong-hun of Ewha Womans University’s Department of Economics said, “The United States’ AI hegemony strategy could be shaken if it pursues short-term profits such as defense spending.”
Experts warned that as the ‘Trump trend’ theory solidifies, global financial markets could continue to fluctuate depending on a single word from candidate Trump until the US presidential election in November.
Hwang Se-woon, a researcher at the Capital Market Research Institute, said, “As the possibility of Trump’s election grows, the policy direction that was previously emphasized is being rapidly reflected in the market,” adding, “Investors also need to be careful because uncertainty in the global financial market has increased.”
Reporter Lee Dong-hoon [email protected]
Tokyo = Correspondent Lee Sang-hoon [email protected]
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2024-07-19 00:15:20