Chip War: How Semiconductor Companies are Navigating Emerging Tech Conflict

By Duncan Ferris


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As Washington battles to scupper Chinese chipmaking efforts, semiconductor players large and small are facing a huge variety of challenges that range from supply chain security to M&A blockages.

The world of semiconductors is now a battleground, as the US and China fight to secure access to the most advanced technologies and supplies. So how are companies adapting to this new state of play? This article will examine the issue with reference to NVIDIA Corporation (NASDAQ: NVDA), Micron Technology Inc. (NASDAQ: MU), ASML Holding N.V. (NASDAQ: ASML) and Magnachip Semiconductor Corporation (NYSE: MX).

The expansion of the US appetite for chips is putting the squeeze on China, which is scrabbling to supercharge its domestic semiconductor manufacturing capabilities. This has impacted companies from across the industry in a myriad of ways.

NVIDIA Corporation (NASDAQ: NVDA) appears to have thrown its lot in with Taiwan, despite threats from China. The advanced tech of outfits like ASML Holding (NASDAQ: ASML) has become gold dust, highlighting the need for IP security. Some outfits like Micron Technology Inc. (NASDAQ: MU) have seen their products banned or restricted for apparent political gain.

But what’s really going on?

NVIDIA Corporation (NASDAQ: NVDA) is highly dependent on Taiwanese manufacturer TSMC. The company’s CEO, Jensen Huang, stated last month on a visit to Taiwan that it was “perfectly safe” for NVIDIA Corporation’s (NASDAQ: NVDA) chips to be manufactured in the country despite the looming military threat from China.

However, Huang has also committed to a “diversity and redundancy strategy” that will see manufacturing spread across several geographies.

Even so, China poses something of a headache to NVIDIA Corporation (NASDAQ: NVDA). That’s because the business is restricted from selling its most advanced graphics processing units to the East Asian superpower in accordance with US export controls.

Beijing might have been hoping for a new offering from the semiconductor on Huang’s recent visit to the continent, but this did not emerge. Perhaps tellingly, Huang’s trip to Asia was cut short, with him skipping a scheduled visit to mainland China.

ASML Holding N.V. (NASDAQ: ASML) is a company that has found itself more caught up in the chip conflict than most.

The Dutch business is largely a supplier of materials and technology to the industry. It is a world-renowned name due to the extreme depth of this supply and its extreme ultraviolet lithography photolithography machines. These machines are essential to the manufacture of the most advanced chips, making ASML Holding N.V. (NASDAQ: ASML) a major industry player.

In February, the business made headlines as it reported a former employee at one of its manufacturing locations in mainland China had stolen technology from the business, highlighting concerns about the safety of its intellectual property.

ASML Holding N.V. (NASDAQ: ASML) has responded to this breach by appearing to distance itself from China, with the business now reportedly considering production plants in Southeast Asia and the Netherlands joining the US in restricting high-tech semiconductor exports.

Micron Technology Inc. (NASDAQ: MU) has got a different end of the stick when it comes to the ongoing chip war. While some in the industry have been restricted from selling their most advanced tech to some Chinese buyers, memory chip outfit Micron Technology Inc. (NASDAQ: MU) appears to have borne the brunt of Beijing’s retaliation.

China’s Cyberspace Administration said in May that “operators of critical information infrastructure in China should stop purchasing products from Micron”.

This is a major hit to the business, which is reported to derive more than 15% of its revenue from mainland China and Hong Kong. It’s, therefore, no surprise that Micron Technology Inc. (NASDAQ: MU) saw its share price quickly decline by more than 5%, though it has since recovered ground.

However, the example indicates that Beijing is willing to flex its muscles and restrict US chipmakers where it can afford to.

Magnachip Semiconductor Corporation (NYSE: MX) is living proof that smaller outfits can be sucked into the chip war. This South Korean outfit was on the shopping list of Chinese private equity outfit Wise Road Capital in 2021, therefore looking poised to become part of China’s growing semiconductor industry.

However, a spanner was launched into the works when the Committee on Foreign Investment in the United States sought to block any deal due to national security concerns. This might sound strange, but Magnachip Semiconductor Corporation (NYSE: MX) was a US-listed Delaware corporation and so the agreement collapsed.

The company’s CEO, YJ Kim, said he was “disappointed” by the termination of the merger agreement, but added that it did not impact “the sound long-term fundamentals” of Magnachip Semiconductor Corporation (NYSE: MX). Even so, the offering of $29 per share still represents a marker the company’s share price has never reached, meaning some investors could feel hard done by.

We’ve demonstrated clearly how the chip war has been a destructive and constraining influence on semiconductor specialists in several different ways. Those with advanced tech like NVIDIA and ASML are forced to hold their products back from Chinese buyers and carefully consider security. Meanwhile, outfits like Micron and Magnachip have found themselves caught in the crossfire as this war over advancement boils on.


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Author: Duncan Ferris

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Duncan Ferris does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Duncan Ferris has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of, has not been paid for the production of this piece by the company or companies mentioned above.

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