📈Semiconductor Stocks Under Pressure

On Friday The Biden Administration placed sanctions on China in the form of restriction to cutting edge semiconductor chips. The bottom line is the sanctions imposed by Biden prevents businesses from sending cutting-edge processors required to run efficient AI algorithms to China. The sanctions require any U.S. citizen working in the Chinese semi industry to quit their jobs, or be at risk of losing U.S. citizenship. We were aware of earlier in the week that the sector was under pressure.

The full scope of how deep the sanctions were not understood until later in the week. On Friday ,Yangtze Memory Technologies and 30 other semiconductor companies have been put to the Unverified List by the Bureau of Industry and Security, a division of the U.S. Department of Commerce. It did not stop there. President Joe Biden signed and executive order is that any U.S. citizen or green card holder working in China cannot work in the Chinese semiconductor industry or risk of losing American citizenship. This essentially shuts down anything in the 5nm range. The 5nm is the cutting edge technology. The companies most impacted will be the Semiconductor equipment manufacturers. AMAT LRCX KLAC are the equipment makers that will be most affected. AMAT issued a statement this weekend that another $500 million in revenue is at risk. This comes after they already guided lower.

ASML issued the following statement:

ASML is critical to manufacturing cutting edge chips that are used in AI. TSMC, Samsung and SK Hynix have reportedly obtained permission to keep shipping chipmaking equipment to their factories in China. TSMC makes the majority of the 5 nm chips on the market now. The idea that the factory would still be able to deliver those chips is interesting.

The semiconductor industry was already under pressure. This latest blow will add to the weakness. Technically we are at 2 year lows. Should the sector not be able to lift January 2020 looks like the next support area.

This weeks video focuses on several short and long ideas going into the week. I also cover what to look for in in TSLA and the indexes.

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