Chip Stocks Tumble as US Tightens China Equipment Curbs
New Commerce Department restrictions on equipment exports to China hit major semiconductor firms like Lam Research and Nvidia.
The semiconductor sector faced a broad sell-off after the U.S. government tightened restrictions on American chip-making equipment used in China, sparking fresh concerns over geopolitical trade frictions. The policy shift contributed to significant declines across the industry, with shares of equipment maker Lam Research falling 4.3%, while chip designer Nvidia dropped 3.3%.
The U.S. Commerce Department escalated trade tensions by revoking prior authorizations that allowed South Korean chipmakers Samsung and SK Hynix to receive American equipment for their manufacturing facilities in China. Under the new rules, these companies must now acquire specific licenses for such purchases, a move expected to directly reduce sales for U.S. suppliers like Lam Research, KLA Corp, and Applied Materials.
Compounding the sector's woes, the slide occurred amid a wider downturn in technology stocks, fueled by disappointing financial guidance from companies such as Dell and Marvell Technology. The market is also digesting a controversial new Trump administration policy that permits Nvidia and AMD to resume exporting advanced AI chips to China, on the condition that 15% of the revenue is returned to Washington. While providing a potential revenue stream, analysts note this shift from restriction to monetization creates significant policy uncertainty and could weaken long-term U.S. strategic leverage over China’s AI development. The confluence of regulatory pressures and market jitters has cast a shadow over the industry, despite projections for strong global semiconductor market growth next year.