Geopolitical Impact on Semiconductor Industry

Geopolitical tensions drive uncertainty in the semiconductor industry, impacting American, European, and Japanese hardware providers in China.

### Geopolitical Uncertainty in the Semiconductor Industry
* 🇺🇸  The Trump administration's stance on semiconductor exports to China remains uncertain, with potential implications for **American, European, and Japanese suppliers**.
* 🇨🇳  China is increasing its focus on **indigenous innovation and self-reliance in technology**, driven by Xi Jinping's call for a **more independent semiconductor industry**.
* 🇯🇵  Japanese and Dutch companies are under pressure to **restrict sales to China**, potentially leading to **retaliatory measures from the Chinese government**.
* 🇹🇼  Former President Trump's comments on Taiwan's security have raised concerns, but experts suggest a **shift in U.S. policy towards Asia** rather than **abandonment of Taiwan**.
* 💼  Industry experts are closely monitoring the semiconductor market, with **geopolitical factors adding volatility to stock prices**.
* 🤖  The AI-driven demand for semiconductors is a key factor in the industry, with **TSMC being a major player** serving clients worldwide.
* 📉  Goldman Sachs' top research analyst has raised questions about the **long-term demand for AI** and its impact on **semiconductor growth**.
* 🍎  Apple's efforts to license more films for its streaming service highlight the tech giant's **focus on expanding its content offerings**.

The chip sector is absolutely in focus right now. Just respond to what you heard from Kunshan there on their thesis on geopolitics and who may or may not benefit in a Trump presidency. Well, I think it is really early to say, and I think that's why we're seeing so much volatility, because while we have a sense from Trump himself, from his vice president, from his top advisers, how he looks at competition with China, the prescriptions that he will use really are unclear to date based on what the Biden administration is doing. We are seeing the potential for more curbs on American and non-American semiconductor products, particularly hardware going to support China in increasing its focus on technology, self-reliance, a key theme coming out of the third plenum. That is what we're hearing, that Xi Jinping is saying we need more indigenous innovation, we need technology to help us build our own.

semiconductor industry because we cannot
rely on an uncertain geopolitical landscape, given uncertainty in the
United States and in Europe. Two key suppliers, and of course Japan, of
this technology hardware to China as a result of that.
Of course, American, European, Japanese hardware providers of China's
semiconductor, a global semiconductor manufacturing, are being pressured to
restrict what they are going to continue to sell and service in China.
That's where so much of this uncertainty is, because the question of how what are
the restrictions? Will the United States be successful in
negotiating with the Dutch, with the Japanese governments to really expand
restrictions on what can be provided by China is the key.
How much do you believe that the threats will become reality?
How much do you think that the Dutch and the Japanese will curtail servicing
technology that already exists in China? Well, I think there's going to continue,
of course, to be American industry pressure that not they alone face those
restrictions, Caroline.

And so, while, of course, U.S. industry doesn't want to see more restrictions on what they can sell to China, if there is not a direct national security concern, they right now are unfairly competing against Japanese and Dutch companies that are continuing to sell to China. And so, yes, I do think that there's going to be more pressure to expand those restrictions. I do not think what we were rumored to be hearing about, that there was going to be a massive expansion is going to come into play, certainly not in the Biden administration. I think there will be incremental steps to restrict certain companies in China from receiving from receiving more semiconductor hardware products in the near term. The Trump administration, which is what we are talking about here, is the big yes. Amy, it takes two to tango, right? And you don't have a crystal ball. But if you take the industry as a parallel example, what China did was

give large volume subsidy, but it had a
limited shelf life. Do you recognize a sort of willingness
from the Chinese government to sort of fund their response to any sort of
political or geopolitical policy that either administration comes with in
November? Yeah, I think that's the key point.
I think the Dutch and the Japanese are very concerned not just for their
companies that are providing the technology hardware to China, were they
to be restricted. It's not just their profits, it's
China's retaliation. I think Xi Jinping has been extremely
clear that if a stranglehold on certain high tech products and services
continues vis a vis the China market, he is going to respond.
He is not, as he has said, going to sit idly by and watch those restrictions
continue to expand. And so the Dutch, the Japanese and the
U.S. government have to think long and hard
on the kinds of retaliatory tools China has available right now.
For example, export restrictions on

graphite.
Caroline to Japan, something Japanese industry desperately needs.
My final point, though, would be China has to weigh its retaliation to make
sure the retaliatory moves don't harm further an already very, very shaky
economy in China. Well said, Amy, and the leverage it had
a few years ago. You advise corporates, you advise
nonprofit clients at the moment ultimately about business and policy
interests. Can you advise us and our audience about
Taiwan, about some of the sentiment that seemed to be displayed by an interview
of Bloomberg Businessweek with former President Trump that maybe they wouldn't
come to Taiwan's aid? What does that mean for TSMC and for
Taiwan? Well, obviously, the silence coming from
Taiwan is deafening here. They are not responding to the
president. Former President Trump's Bloomberg
interview there. Instead, they are choosing to stand by
what the platform of the Republican

Party traditionally has been, which is to include Taiwan in it. And to say that, of course, the United States and Taiwan have a have a legislatively mandated, very strong relationship that does include U.S. provisions to come to Taiwan's aid. Of course, it's up to the commander in chief. So Taiwan authorities must be worried. But I will say the worry is probably not severe right now because most of the advisers around President Trump, including his his selection of vice presidential candidate with J.D. Vance, are very strong supporters of Taiwan. And so within a Trump to administration, were that to come to pass. There are going to be very significant conversations around how the United States continues to focus more on Asia than Europe, which is clearly a platform that we're starting to hear coming out of the Republican convention and what that means for U.S. policy towards Taiwan. So I wouldn't be so quick to conclude

that President Trump is going to abandon
Taiwan in the event of some kind of conflict, that would really be going
against traditional U.S. policy, particularly among the
Republicans. Amy, so important to have your
expertise. We thank you.
Amy Zelikow, principal analyst at Albright Stonebridge Group.
We thank you. And what's so interesting is we see this
volatility in the individual stocks today as we question ultimately some of
the valuations and where we've run into in the invidious in the like.
Yeah. I think what's so astonishing about the
conversation we just had, detailed, but we didn't even discuss about another
factor, which is the AI driven boom, right?
Growth driven by demand for accelerated manufacturing.
TSMC has clients everywhere. And so I just wonder how maybe we'll
talk to Jensen about it in a few weeks' time.
But it's like geopolitics takes away one market.
There are plenty waiting in the wings to

get some capacity, and I just thought it
was weird. You're right.
You bring that up. But then Goldman Sachs, top research
analyst today currently saying maybe you need to question the ultimate demand of
AI in the longer term. Will it really drive this productivity
growth? Great story on Jim Cavallo from some of
our colleagues and Bloomberg News today. Meanwhile, coming up, Apple, we know, is
in talks to license more films from major Hollywood studios.
Look, it's an effort to bolster its Apple TV plus streaming service in
report by Bloomberg. Stick with us.
This is Bloomberg Technology.

More Pressure on Chip Sector to Come: Analyst Celico

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Bloomberg Technology

The Impact of Geopolitics on the Chip Sector

The uncertainty surrounding the US-China geopolitical landscape is causing volatility in the chip sector.

China is focusing on indigenous innovation and self-reliance in technology, putting pressure on American, European, and Japanese hardware providers.

There are questions about the potential restrictions on semiconductor sales and servicing in China, leading to industry-wide pressure.

Potential Expansion of Restrictions on U.

There may be increasing pressure to expand restrictions on U.

companies selling to China, despite the lack of a direct national security concern.

The potential expansion is likely to involve incremental steps rather than a massive change, especially under the Biden administration.

The concern for not only the profits of the Dutch and Japanese companies, but also China's potential for retaliatory action, is a key factor that the U.

The Impact of Former President Trump's Comments on Taiwan

Former President Trump's comments in a Bloomberg Businessweek interview have left Taiwan with a deafening silence, as they chose not to respond directly.

The lack of response may be due to their alignment with the traditional stance of the Republican Party, which supports including Taiwan.

Despite potential worries, the strong support for Taiwan among President Trump's advisors may lead to significant conversations and a focus on Asia in U.

The Impact of Geopolitics on Tech Stocks and AI Growth

Speculation about President Trump abandoning Taiwan goes against traditional US policy, causing volatility in tech stocks.

The AI-driven boom in manufacturing is a significant factor driving growth, but there are now questions about its long-term demand and productivity impact.

Meanwhile, Apple's efforts to license more films aim to strengthen its Apple TV plus streaming service amid the changing tech landscape.