Wall Street’s semiconductor index lost over $480 billion in stock market value today and headed for its worst session since 2022 after a report said Washington was mulling tighter curbs on exports of advanced semiconductor technology to China.

Remarks from Republican presidential nominee Donald Trump saying key production hub Taiwan should pay the U.S. for its defense deepened selling in chip stocks.

The U.S. has told allies it is considering using the most severe trade curbs available if companies continue giving Beijing access to advanced semiconductor technology, Bloomberg News reported on Tuesday.

U.S.-listed shares of Dutch chipmaking equipment provider ASML Holding slumped 11% following the report even though it beat second-quarter profit estimates.

AI heavyweight Nvidia fell almost 7%, losing more than $200 billion in market capitalization.

Smaller rival AMD dropped 8%. Qualcomm, Micron, Broadcom and Arm were all down more than 5%.

However, companies with chip manufacturing operations in the U.S. gained, with Intel, GlobalFoundries and Texas Instruments up between 0.3% and 8.5%. Some analysts believe Intel could benefit from the geopolitical tensions as it is building several plants in the country.

“Market reactions are likely short-lived because the fundamental factors driving these markets haven’t changed. Yes, U.S. restrictions on shipments to China will likely increase somewhat – regardless of the U.S. election outcome – but they’ve already been in place for a while,” said Bob O’Donnell, chief analyst at TECHnalysis Research.

The Biden administration has moved aggressively to curb Chinese access to cutting-edge chip technology, including sweeping restrictions issued in October to limit exports of AI processors designed by firms including Nvidia.

The curbs have dented U.S. chipmakers’ sales to China. Nvidia’s revenue from China stood at about 18% of its total revenue in the quarter ended April 28, compared with 66% in the year-ago period.

Former U.S. President Trump told Bloomberg Businessweek that Taiwan should pay the U.S. for its defense as it does not give the country anything. That sent U.S.-listed shares of Taiwan’s TSMC – the world’s largest contract chip maker – down 6%.

Taiwan plays an outsized role in the global chip supply chain and analysts have warned that any conflict over the island may shatter the global economy.

The Philadelphia Semiconductor index was down more than 5% in afternoon trading, on track for its biggest one-day percentage decline since October 2022.

The index still remains up 32% for 2024, outperforming the S&P 500 index’s 17% gain, thanks to the AI boom.

INTEL COULD BENEFIT

Intel has been investing heavily to restore the manufacturing edge it lost to TSMC. It is also one of the biggest beneficiaries of the U.S. Chips Act signed by President Joe Biden in August 2022 with $52.7 billion in subsidies.

Several policy experts said Washington’s focus on semiconductors will likely continue, even if Trump returns to power, with potentially more curbs on exports to China and support for domestic chipmakers such as Intel.

But they warned questions remain over Intel’s ability to revitalize its manufacturing business, with the company’s foundry segment recording an operating loss of $2.47 billion for the quarter ended March 30.

“It’s likely President Trump would not only continue export restrictions, but strengthen them,” said Michael Sobolik, a senior fellow at the American Foreign Policy Council.

“He initiated many semiconductor export controls during his first administration, including the powerful ‘foreign direct product rule’ that limited foreign parties from enabling Huawei’s access to semiconductors.”

Additional reporting by Noel Randewich in Oakland.