Rosalind Evans
The AI-driven narrative has significantly boosted chipmaker stocks in 2023. However, the recent decline in these shares has been influenced by escalating tensions between the US and China.
Huawei, the Chinese tech giant, recently unveiled its contentious Mate 60 Pro model. This has sparked US inquiries into how Huawei was able to introduce this product despite facing 5G technology access restrictions over the past four years. This might indicate a faster-than-expected advancement in Chinese tech capabilities.
Such developments have led US congressmen, Mike Gallagher and Michael McCaul, to suggest enhanced technology export restrictions to Chinese firms.
CFRA’s senior semiconductor analyst, Angelo Zino, predicts over a 50% likelihood of the US intensifying chip limitations in China, potentially affecting US-based smartphone ecosystem players like Qorvo and Skyworks Solutions.
In a discussion with Before the Bell, Zino elucidated:
There’s a tug-of-war in AI between the US and China. Concerns revolve around China potentially accessing chip technology from US firms. Currently, major semiconductor production happens in Taiwan and Korea, with China intensifying its efforts. About one-third of global electronic devices get assembled in China, with companies like Foxconn at the forefront. China’s growth in chipmaking has been significant, even amidst US-imposed bans and tariffs.
The investigation around Huawei’s new phone arises because of its powerful chip, developed internally and produced by China’s Semiconductor Manufacturing International Corporation (SMIC). This suggests SMIC can produce advanced 5G chips, which has US officials concerned about maintaining a technological edge.
The key question is whether Huawei’s device uses any prohibited components. The phone’s capabilities hint at a rapid advancement in Chinese tech, which may lead to further US restrictions on Huawei and SMIC.
For US investors, such developments can benefit top semiconductor firms like Nvidia and Qualcomm in the long run. However, predicting short-term implications becomes challenging.
Investors should focus on long-term drivers and not get swayed by daily fluctuations and geopolitical tensions. The potential of the semiconductor sector, especially in AI, is significant. However, strategic investment decisions are essential.
Intel has attracted interest as it restructures its business, emphasizing diversifying from Asia. They are positioning themselves as a solution to rising geopolitical tensions in the semiconductor domain.
US Dollar Regains Dominance
The US dollar has been on an upswing, marking its longest rally in almost nine years, as per Anna Cooban’s report.
Following months of fluctuation and fears regarding the dollar’s global reserve currency status, its value surged by 5% since mid-July. Positive US economic data and the Federal Reserve’s anticipated interest rate stance have buoyed the dollar.
However, economic uncertainties loom over China and Europe, impacting their currencies.
Furniture Market Faces Challenges
According to Samantha Delouya, the furniture market is seeing a downturn.
Recent reports from luxury furniture brands like RH and Hooker Furnishings indicate significant revenue drops. The decline in stocks of these companies reflects growing investor concerns. This downward trend comes after a period of growth inspired by pandemic-induced home trends.
Williams-Sonoma CEO, Laura Alber, highlighted a shift in consumer spending, with people currently purchasing fewer high-ticket furniture items.
The global landscape, whether in technology, finance, or consumer habits, remains ever-evolving. The tug-of-war between tech giants and geopolitical forces, fluctuations in currency strengths, and shifting consumer behaviours all underscore the dynamic nature of the world’s markets. As we navigate through these changing tides, the importance of staying informed and strategic in decision-making becomes paramount.
