The ongoing geopolitical crisis between the United States of America and the People’s Republic of China on the topic of recognition of Taiwan (Republic of China) has begun to impact the stock of the vital semiconductor industry.
Soon after information came out that Speaker of United States Congress, Nancy Pelosi would be visiting Taiwan, the stock started to tumble. China, which is of the stand that Taiwan is part of the country, has vehemently opposed the move by Nancy Pelosi to visit the island and even threatened to use the military.
Why the Semiconductor industry?
The reason why the semiconductor industry is being impacted first by this conflict is that Taiwan is home to the largest Semiconductor manufacturer in the world.
Taiwan Semiconductor Manufacturing Co Ltd, famously known as TSMC is a pioneer in the field of developing and manufacturing semiconductors.
Founded 35 years ago in Taiwan, TSMC is currently the largest multinational company in Taiwan with annual revenue of more than 57 billion dollars and a total employee headcount of more than 65000.
The company is currently listed on both New York Stock Exchange in the United and Taiwan Stock Exchange.
Other than TSMC, Taiwan is also home to United Microelectronics Corporation, another company which focuses on the field of Semiconductor development and manufacture.
How do stocks react to Nancy Pelosi’s visit?
Stocks of TSMC listed on the Taiwan Stock Exchange (otherwise known as the Taipei Exchange) fell by nearly 2.38% to close the market at 492 Taiwan dollars per share.
While TSMC fell by 2.3%, shares of its peer United Micro Electronic Corporation declined by 2.98% to close the market at 39.10.
The Benchmark index of the Taiwan Stock Exchange, FTSE TWSE Taiwan 50 Index, lost 161.51 points to conclude trading at 11,403.41 on Tuesday.
The biggest semiconductor manufacturing company in China, Semiconductor Manufacturing International Ord Shs also saw a decline in its stock prices on Tuesday.
The stocks of Semiconductor Manufacturing International Ord Shs which is listed on the Hong Kong Stock Exchange declined by nearly 3.48% to conclude trading at 15.54 Hong Kong dollars per share.
It is important to note that Hong Kong Administration came in support of China after speaker Nancy Pelosi landed in Taiwan on Tuesday night.
In the Western world, an American Dutch semiconductor manufacturer based in the Netherlands, NXP Semiconductors, on Tuesday witnessed its shares going down.
As of 2 Aug, 3:37 pm GMT-4, the stocks of NXP Semiconductors listed on Nasdaq as NXPI are trading at 180.83 US dollars per share. This is 1.89% lower than the previous close.
Another American semiconductor giant, Texas Instruments Incorporated has lost nearly 0.6% in its share value due to the global after-effects of the decision of Nancy Pelosi.