What's Going On With Taiwan Semiconductor And Nvidia Stock Tuesday?

China has imposed stringent export controls on crucial semiconductor materials, severely impacting global supply chains and raising concerns about potential shortages in Western production of advanced chips and military optical hardware.

The restrictions primarily affect shipments of germanium and gallium, which are vital for semiconductor applications, military, and communications equipment components, the Financial Times reports.

China’s move will have a profound impact on the semiconductor sector, led by Taiwan Semiconductor Manufacturing Co TSM and Nvidia Corp NVDA who are already having a hard time meeting the surging demand for artificial intelligence chips.

Taiwan Semiconductor and other companies dependent on these materials have seen a significant cost spike due to the controls China introduced in 2023. The key contract chipmaker looks to accomplish its margin goals by exercising its pricing strategy, as per a recent report.

Taiwan Semiconductor’s price hike will automatically reflect in the prices of its key customers, Nvidia and others, who, too, will have to boost their prices to protect their margins.

China dominates the global supply of germanium and gallium, which are critical for producing advanced microprocessors, fiber-optic products, and night-vision goggles.

China produces 98% of the world’s gallium and 60% of its germanium, the Financial Times cites the U.S. Geological Survey. As a result, prices for these minerals in Europe have nearly doubled over the past year, causing significant strain on industries reliant on them.

Additionally, China recently announced export restrictions on antimony, a mineral used in armor-piercing ammunition and precision optics.

China’s retaliation follows the U.S. semiconductor embargo, which restricted China’s access to advanced semiconductor technology, including artificial intelligence, from the likes of Nvidia Corp NVDA, Advanced Micro Devices, Inc AMD, and Micron Technology, Inc MU.

Nvidia had maintained a lack of impact due to the U.S. sanctions.

Recent reports indicated Chinese AI developers accessed advanced Nvidia chips through overseas data centers by leveraging blockchain technology.

Price Actions: TSM stock traded lower by 0.60% at $168.16 at last check Tuesday. NVDA is down 0.04% at $126.44.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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