Semiconductor shares have spent the last couple days on quite a rollercoaster ride.
Yesterday was all doom and gloom. With Donald Trump having already shaken the sector by warning he wouldn’t defend Taiwan against China during a second presidency unless Taiwan paid for its “insurance,” incumbent President Joe Biden’s administration caused a mini-meltdown by reportedly considering major new export controls.
Specifically, Bloomberg reported that the U.S. could invoke a measure called the foreign direct product rule to try stopping major chipmaking equipment providers like the Netherlands’ ASML and Japan’s Tokyo Electron from giving Chinese chipmakers access to any American tech at all. The Biden administration has already browbeaten these companies into not selling their cutting-edge wares to Chinese chipmakers, but the move that’s being considered would end their servicing of existing machinery—which may break down in months as a result.
ASML’s shares lost an eighth of their value on that news, while Tokyo Electron was down 8.7%. American chipmaking equipment makers, which think over-pressuring the Netherlands and Japan might cause them to stop cooperating, didn’t fare much better. Applied Materials, Lam, and KLA were all down around 10%.
Meanwhile, the share price of Taiwan’s TSMC, the world’s biggest contract chipmaker, dropped 8% and that of Nvidia—which relies on TSMC to manufacture its industry-leading AI chips—fell 6.6%. The Nasdaq as a whole fell 2.8%, giving the exchange its worst day since 2022. (Interestingly, chipmakers Intel and GlobalFoundries both had a good Wednesday, perhaps because they have significant manufacturing facilities in the U.S. and could benefit from either Trump or Biden’s policies.)
Then, today, the sun came out. Most of the above-mentioned Wednesday losers rose again, with the biggest recoveries—albeit still only partial—being TSMC and Nvidia, which were both up over 3% at one point.
That’s because TSMC today boosted its full-year revenue forecast on the back of strong AI chip demand. Here’s TSMC CEO and chairman C.C. Wei, in a Reuters-reported quote that’s one piece of punctuation away from fitting into the Mugatu meme: “AI is so hot; right now everybody, all my customers, want to put AI functionality into their devices.”
But then TSMC and everyone else’s shares fell again, reentering the red as investors continue to take fright at the U.S. moves that could be around the corner.
And there you have it: a perfect microcosm of the tech industry’s big concerns this year. Geopolitical jitters rubbing up against AI euphoria. These are narratives in motion, and they won’t be settling down anytime soon.
More news below.
David Meyer
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NEWSWORTHY
Meta AI paused in Brazil. Disquiet over Meta’s exploitation of user data to train its AI is spreading. After pausing its AI rollout in Europe, Meta has now done the same in Brazil. Brazil’s National Data Protection Authority already effectively blocked Meta’s AI-training practices earlier this month after the company tried to claim the right to train its AI with its users’ Instagram and Facebook data. According to Reuters, Meta now says it will try to address the agency’s doubts.
Samsung buys AI firm. Samsung is buying a British AI startup called Oxford Semantic Technologies for an undisclosed amount, Reuters reports. The company makes a “rules-based reasoning engine” that aims to provide truth in a transparent way. In related news, EU antitrust regulators are reportedly trying to determine if there’s any issue with Samsung’s big chatbot deal with Google, which involves Google’s Gemini Nano model being preinstalled on Samsung’s flagship smartphones.
New $1 billon startup. “Godmother of AI” Fei-Fei Li founded a startup called World Labs four months ago, and it’s already worth $1 billion, according to the Financial Times. Apparently World Labs has already taken two funding rounds from the likes of Andreessen Horowitz and Radical Ventures. Around half of startup funding has gone to the AI sector in the last three months. Li, who has taken a partial break from codirecting the Stanford Institute for Human-Centered AI, is apparently trying to make a breakthrough in giving AI “spatial intelligence” through human-like interpretation of visual information.
ON OUR FEED
“If a politician is pro-crypto, the key question to ask is: Are they in it for the right reasons? Do they have a vision of how technology and politics and the economy should go in the 21st century that aligns with yours? Do they have a good positive vision, that goes beyond near-term concerns like ‘smash the bad other tribe?’”
—Ethereum cocreator Vitalik Buterin issues a pre-U.S. election warning, in a blog post self-explanatorily entitled “Against choosing your political allegiances based on who is ‘pro-crypto.’”
IN CASE YOU MISSED IT
Andreessen Horowitz founders endorse Trump—‘the future of our business…is literally at stake,’ by Christiaan Hetzner
AI adoption in ad industry needs ‘non-optional mandates,’ says Interpublic CEO Philippe Krakowsky, by David Meyer
New technologies like AI let companies learn more about their customers—while raising privacy questions, by Luisa Beltran
Getting to the moon is a ‘moral obligation’ to preserve humanity, space tech executives say, by Leo Schwartz
Tesla let a man sell his Cybertruck because it didn’t fit in his garage, by Marco Quiroz-Gutierrez
Zoox CEO says robotaxis are still several years away from the ‘holy grail’ of the business: New York City, by Jessica Mathews
Reliable GPS is coming to an end—but new quantum technologies could show the path forward, by Michael J. Biercuk
BEFORE YOU GO
Lilium’s Saudi deal. The electric aviation firm Lilium has scored what is likely to be an extremely lucrative deal with the operator of Saudi Arabia’s biggest airline, The Verge reports. Germany’s Lilium makes a $10 million, four-seat electric vertical takeoff and landing (eVTOL) aircraft called the Pioneer. The Saudia deal—the sector’s biggest so far—is for 50 of Lilium’s jets, with an option for another tranche of the same size. Lilium said in a statement that the aircraft “will support Hajj and Umrah pilgrimages, offer faster access to key sports and entertainment events in Riyadh, and unlock new possibilities for exploring hard-to-reach tourist destinations across the Kingdom.”