American chip makers are stuck in the eye of this growing storm
The American chip makers are the ones that are arguably one of the most affected amidst the growing trade tensions between the U.S. and China.
One of the major markets that deals with the chip-making companies in America are the Philadelphia semiconductor index which is an index of almost 30 semiconductor companies has fallen by about 16% in the month of May alone.
This is the index’s worst showing since the financial crisis and the growing tensions are definitely not helping this picture in any way.
These companies are all heavily reliant on China for their respective businesses, there has been a significant negative impact on many major companies and their stocks.
Shares of Qualcomm, Micron, Nvidia and Broadcom have all fallen even more and in comparison, a heavily tech-dependent market, the S&P 500 is down about 4%.
With the U.S. economy looking as good as it ever will, it also inspires confidence in the President who has been more aggressive as he made decisions that escalated the trade war with China.
He increased duties on Chinese products and further limited American firms from trading parts and technology to Huawei.
The reply from China was equally aggressive towards them, as they too have imposed tariffs and show no signs of backing down.
China is the largest user of smartphones in the world, they also account for 35% of the global semiconductor sales and have spent almost $11 billion on buying components and other supplies from American companies the last year.
The ban will now affect and halt all these sales, the Chinese companies will not suffer as much thanks to preemptive stockpiling of the chips in the possibility that any kind of ban was put into effect.