Chip stocks led by Nvidia Corp (NASDAQ:NVDA) and Advanced Micro Devices, Inc (NASDAQ:AMD) are trading lower Wednesday as the U.S. intensified semiconductor sanctions against China, followed by Presidential candidate Donald Trump’s attack against crucial contract chipmaker Taiwan Semiconductor Manufacturing Company (NYSE:TSM).
The Biden administration is contemplating using the Foreign Direct Product Rule (FDPR), which allows it to impose controls on foreign-made products that incorporate even minimal amounts of American technology, Bloomberg reports.
The U.S. has presented this possibility to officials in Tokyo and The Hague.
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Additionally, the U.S. is considering further sanctions on specific Chinese chip companies.
The U.S. semiconductor companies have significant exposure to China. Prior reports indicated Nvidia could sell $12 billion of AI chips in China this year despite U.S. export controls.
Meanwhile, former President Donald Trump has triggered jitters in the semiconductor sector with the latest remark.
The key Nvidia supplier, Taiwan Semiconductor, is trading lower on Wednesday after Trump said that the contract chipmaker should compensate the U.S. for its defense.
Trump suggested this during a Bloomberg Businessweek interview on June 25, which was published on Tuesday.
The broader chip sector is trading lower Wednesday, including Broadcom Inc (NASDAQ:AVGO), Qualcomm Inc (NASDAQ:QCOM), Arm Holdings Plc (NASDAQ:ARM), Micron Technology Inc (NASDAQ:MU), Marvell Technology Inc (NASDAQ:MRVL), Microchip Technology Inc (NASDAQ:MCHP), STMicroelectronics Inc (NASDAQ:STM), ON Semiconductor Corp (NASDAQ:ON), GlobalFoundries Inc (NASDAQ:GFS), United Microelectronics Corp (NASDAQ:UMC), Skyworks Solutions Inc (NASDAQ:SWKS).
Investors can gain exposure to the semiconductor sector through ProShares Ultra Semiconductors (NYSE:USD) and Invesco PHLX Semiconductor ETF (NASDAQ:SOXQ).
Price Actions: NVDA shares traded lower by 4.02% at $121.28 at the last check on Wednesday.
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