Semiconductor stocks fall amid new US restrictions on China sales
Shares of major U.S. chipmakers are trading lower on Monday in pre-opening after the Commerce Department's Bureau of Industry and Security (BIS) announced a series of limits on high AI chip exports range to China.
Export controls are also meant to seriously limit China's ability to buy and manufacture high-end chips. As many as 31 companies are added to the unverified list after the BIS previously notified NVIDIA (NASDAQ: NVDA ) and AMD (NASDAQ: AMD ), among others, of the new export limits.
“As I told Congress in July, my North Star at BIS is to make sure we do everything in our power to protect our national security and prevent sensitive technologies with military applications from being acquired by the military, intelligence and security services of the People's Republic of China," Commerce Undersecretary for Industry and Security Alan Estevez said in a press release.
Here's what high street chip analysts have to say about the latest developments.
Stifel: "It will leave its mark. On the one hand, the most advanced logic foundry operating in China (SMIC) has already been added to the entity list (at the end of 2020), and the additional impact on semiconductor suppliers is therefore likely limited. The biggest impact will be to cut off the flow of equipment/items related to memory companies YMTC (NAND) and CXMT (DRAM).
Bank of America: "As we noted recently, the largest impact (5%-10% of sales) is likely to be felt by: 1) leaders in processors (more INTC than AMD) and hardware accelerators 'IA (NVDA), 2) Semicap (LRCX most exposed to YMTC). No mention of EDA tools, although wide implementation may affect them as well."
Citi: "We believe the new rules could lead to a) restrictions on DUV lithography in China, and b) new restrictions on data center processors (including CPUs, TPUs, FPGAs in addition to legacy GPUs only) if processor chips reach a certain threshold of computational instructions (4800+) and/or computational power density (0.02+ PFLOPS/square foot)."
Chip companies that fell in pre-market trading in the US include Lam Research (NASDAQ: LRCX ) -1.3%, Micron (NASDAQ: MU ) -0.6%, Applied Materials (NASDAQ: AMAT ) -0.9%, Nvidia -1.2%, AMD -1.1%, etc.
By Senad Karaahmetovic