Previously, the U.S. Commerce Department added five Chinese technology companies to an entity list which bans companies from buying American parts.
A recent and major action from the U.S. was the addition of Chinese tech giant Huawei to the blacklist. Higon, Chengdu Haiguang Integrated Circuit, Chengdu Haiguang Microelectronics Technology, Sugon and Wuxi Jiangnan Institute of Computing Technology are the Chinese firms added to this entity list. Chips stocks have fallen with the addition of more companies to the entity list.
“Beijing received another reminder of U.S.’s willingness to crack down on Chinese tech firms on Friday, with the Commerce Department’s announcement that it will place several Chinese supercomputing companies-including number two firm Sugon- on the entity list,” stated by Michael Hirson, who leads Eurasia Group’s coverage of China.
These restrictions on Huawei will force many American chipmakers and tech companies to stop doing business with Huawei. Some companies are lobbying to ease restrictions on the ban.
The tech industry is being severely impacted by this ban, with U.S. semiconductor as shares of Advanced Micro Devices (NASDAQ: AMD) fell over 3%, Xilinx (NASDAQ: XLNX) dropped by 2.2%, and Nvidia (NASDAQ: NVDA) shrank 1.5%.
This trade war may come to a conclusion as U.S. and Chinese negotiation teams are scheduled to meet in Japan for the G-20 meeting. However, there is speculation that this meeting will only result in a new round of talks or perhaps new tariffs slapped on.