The chip sector melted down Friday for its third 6% one-day drop of the year after U.S. regulators moved to pump the brakes on China’s military ambitions as it issued wider restrictions on semiconductor and AI technology that can be sold to the world’s second-largest economy.
On Friday, the U.S. Department of Commerce expanded its list of chip technology that requires a license to be sold to China — essentially a euphemism for a ban if the license can be denied — and the PHLX Semiconductor Index
SOX,
-6.06%,
which had been down around 3% before the news broke, dropped to close the session down 6.1% at 2,356.75, a closing level that investors last saw on the uptick in early November 2020.
News of the ban was served fresh on the back of Advanced Micro Devices Inc.
AMD,
-13.87%
issuing a $1 billion shortfall warning on expected sales to PC customers late Thursday. That followed last week’s revenue forecast from memory-chip maker Micron Technology Inc.’s
MU,
-2.93%,
which was about $1 billion below Street expectations, prompting analysts to ask whether 2022’s sudden chip glut is worse than the one in 2019. AMD shares led the fall for chip stocks with a 13.9% drop to close at $58.44, with Micron shares down a modest 2.9% at $52.91.
Read: ‘This is worse than 2019’: Micron faces ‘unprecedented’ supply issues and analysts are split on if it has hit bottom
Friday’s drop is only the worst one-day drop on the SOX index since Sept. 13, when it dropped nearly 6.2%. In fact, Friday’s fall is merely the third worst one-day performance of the year for the SOX index with June 16’s fall of just over 6.2% ranking the worst, according to FactSet data.
The Commerce Department’s wider list adds to one from September that focused on AI tech from Nvidia Corp.
NVDA,
-8.03%.
Shares of Nvidia fell 8% to close at $120.76 Friday.
Nvidia shares melted down last month when the graphics processing unit maker disclosed the list of…
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