Korean chipmakers' shares tank in wake of Trump's threat of China trade curbs

Industry

Published: 19 Jul. 2024, 18:24 Updated: 19 Jul. 2024, 19:42

Korean chipmakers' shares tank in wake of Trump's threat of China trade curbs

Republican presidential candidate and former President Donald Trump speaks during the final day of the Republican National Convention in Milwaukee, Wisconsin on Thursday. [AP]

Investor sentiment for Korea’s top chipmakers as well as competitors outside of the country has deteriorated following Donald Trump’s heavy-handed remarks on economic relations with Taiwan and the need for stronger chip export curbs against China.

The Republican presidential nominee, who now has increased odds of winning the election, according to some polls, said in an interview with Bloomberg that was published on Wednesday that Taiwan is “taking about 100% of our chip business” and that it should pay the United States for defense.

The remarks in the interview conducted on June 25 are considered unconventional given that the comment was targeting a U.S. ally.

Following the interview, both Samsung Electronics and SK hynix stocks slumped.

Samsung lost 2.88 percent to close at 84,400 won on Friday. SK hynix suffered losses for three consecutive days, closing down 1.41 percent at 209,500 won. It tumbled 5.36 percent on Wednesday and continued the losing streak the next day, plunging 3.63 percent.

The nominee’s stance was not limited to Taiwan. Trump warned other allies against providing Beijing access to advanced semiconductor technology, adding that he is considering imposing the most severe trade curbs available in instances when companies skirt the directive and give China access.

U.S. chip giants like Nvidia and Qualcomm as well as Taiwan’s TSMC and Dutch chip equipment maker ASML also saw their shares shed substantially following the remarks.

Wall Street’s semiconductor index eroded over $500 billion in stock market value on Wednesday, slipping to its worst session since 2020.

Many experts also believe that the candidate could determine the fate of the CHIPS Act, drafted during the Joe Biden administration, under which Samsung, TSMC and other leading chipmakers have benefited.

However, chances are slim that Trump could take away the subsidies promised under the act.

A report by Taiwanese semiconductor market tracker TrandForce cited the view of Liu Da-nian, Director of the Regional Development Study Center at the Chung-Hua Institution for Economic Research, who noted "that although Trump believes the U.S. CHIPS Act is a misguided policy, the act was passed by the U.S. Congress, making it difficult to overturn and it is already being implemented."

BY PARK EUN-JEE [park.eunjee@joongang.co.rk]