Chip stocks plummet amid concerns over stricter US restrictions on sales to China

Shares of chipmakers dropped over 4 per cent in pre-market trading on Wednesday, driven by reports of potential tighter restrictions on advanced technology exports to China and comments from Republican presidential nominee Donald Trump regarding Taiwan. According to Bloomberg News, the US is contemplating the use of the most stringent trade measures available if companies continue providing Beijing with access to advanced semiconductor technology.

Despite surpassing second-quarter profit estimates, shares of Dutch chip making equipment provider ASML Holding (ASML.AS) fell around 8 per cent following the report. Existing restrictions have already impacted U.S. chipmakers' sales to China. Nvidia's revenue from China constituted about 18 per cent of its total revenue for the quarter ended April 28, a significant drop from 66 per cent in the same period last year.

Shares of AI leader Nvidia declined nearly 4 per cent pre-market. Smaller competitor AMD saw a 3.5 per cent decrease, while Qualcomm and Arm Holdings both fell approximately 4 per cent. Concerns were further heightened by former U.S. President Donald Trump's statement to Bloomberg Businessweek that Taiwan should compensate the U.S. for its defense, as it provides nothing in return. This remark caused TSMC's U.S.-listed shares to drop by 5.4 per cent.

(With Reuters inputs)