Profit taking

Semiconductor stocks faced a challenging week, with major US chip manufacturers Nvidia Corp., Advanced Micro Devices Inc., and Broadcom Inc. contributing to a nearly 7% decline in a key semiconductor index yesterday—the steepest drop since 2020. In Europe, ASML Holding NV plummeted 11% on Wednesday despite reporting robust orders. The primary factor behind this downturn is escalating geopolitical risks, as the Biden administration considers imposing stringent restrictions on companies like Tokyo Electron and ASML if they continue providing China with advanced semiconductor technology. This comes at a time when semiconductor stocks have shown strong performance in the first half of the year, with the index rising 36% due to the AI boom, pushing their valuations to record highs.