The global semiconductor market is going through a tough time. The slowdown in demand and geopolitical challenges have contributed to a significant dent in the market's value. Shares of leading semiconductor companies, including Samsung, continue to pressure downward.
The export restrictions announced by the Biden administration last week have further complicated matters. These measures cut off China from select chips made anywhere in the world with US technology and significantly limited American technology's export to Chinese semiconductor companies.
Measures are aimed at limiting China's tech advance
The US has effectively restricted many local companies that produce chipmaking tools from exporting equipment to wholly Chinese-owned factories that produce advanced chips. A wide range of chips, made with American technology, used in Chinese supercomputers can no longer be exported to the country.
Consequently, shares of semiconductor companies across South Korea, Japan, and Taiwan saw a major decline that wiped off more than $240 billion from the semiconductor industry's global market value since last Thursday's close.
TSMC saw its shares decline by 8.3% on opening today whereas Samsung saw a 3.9% decline, the most in a year. SK Hynix, a major supplier of memory chips that also has factories in China, saw a 3.5% decline in its share price.
These measures are aimed at curtailing the rise of Chinese dominance in the semiconductor industry as well as limiting its advanced military capabilities. China could face difficulties in securing the technology it needs from countries like South Korea and Japan since they're close allies of the United States.
The increased geopolitical challenges only add to Samsung's worries. The company is likely going to lose its status as the world's largest chipmaker to TSMC as it expects profits to decline significantly in Q3 2022 on the back of low demand for its memory chip products.