Semiconductor stocks drop following Commerce Department barring purchases from Chinese companies

Share This Article
June 21, 2019 2:32pm NYSE:XSD

uschinatradewar

From Yun Li:

KEY POINTS

  • Five more Chinese companies are banned from purchasing U.S.-made components.
  • The Commerce Department said these companies’s activities “pose a significant risk of being or becoming involved in activities contrary to the national security and foreign policy interests of the United States.”
  • Shares of U.S. semiconductors came under pressure after the announcement.

The U.S. Commerce Department has banned five more Chinese entities from buying U.S. components after blacklisting telecom giant Huawei last month.

Higon, Chengdu Haiguang Integrated Circuit, Chengdu Haiguang Microelectronics Technology, Sugon and Wuxi Jiangnan Institute of Computing Technology are the five Chinese firms added to the department’s entity list, according to a filing.

The department said these companies’s activities “pose a significant risk of being or becoming involved in activities contrary to the national security and foreign policy interests of the United States.”

Shares of U.S. semiconductors came under pressure after the announcement. Advanced Micro Devices tumbled more than 2%, while Xilinx and Nvidia also fell 2.2% and 1% respectively.

The move came before President Donald Trump’s key meeting with Chinese leader Xi Jinping at the G-20 summit this month to discuss the lingering trade differences. The U.S. and China have slapped tariffs on billions of dollars worth of each other’s goods, while ramping up tit-for-tat threats in the ongoing trade war.

The department said Sugon, the Wuxi Jiangnan Institute of Computing Technology, and the National University of Defense Technology are the leaders in China’s development of exascale high performance computing.

Sugon has publicly acknowledged “a variety of military end uses and end users of its high-performance computers,” the department said. Wuxi Jiangnan Institute of Computing Technology’s mission is “to support China’s military modernization,” the department noted.

The U.S. restrictions on Huawei have forced many U.S. chipmakers and tech companies including Google to cut ties with the Chinese giant. Huawei’s American chip suppliers, including Qualcomm and Intel, are reportedly quietly lobbying to ease Huawei ban.


The SPDR S&P Semiconductor ETF (XSD) was trading at $81.65 per share on Friday afternoon, down $0.74 (-0.90%). Year-to-date, XSD has gained 17.13%, versus a 10.84% rise in the benchmark S&P 500 index during the same period.

XSD currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #23 of 79 ETFs in the Technology Equities ETFs category.


This article is brought to you courtesy of CNBC.


9 "Must Own" Growth Stocks For 2019

Read Next



Get Free Updates

Join over 50,000 investors who get the latest news from ETFDailyNews.com!

Most Popular



Explore More from ETFDailyNews.com

Free Daily Newsletter

Get daily ETF insights from our market experts. Never miss another important market development again!

ETFDailyNews.com respects your privacy.

Best ETFs

We've rated and ranked nearly 2,000 ETFs and ETNs using our proprietary SMART Grade system.

View Top Rated ETFs

Best Categories

We've ranked dozens of ETF categories based on relative performance.

Best ETF Categories