Semiconductor stocks stumbled Friday after reports surfaced that the U.S. government is considering revoking waivers that currently allow major global chipmakers to use American technology in their Chinese operations.
According to The Wall Street Journal, Commerce Department official Jeffrey Kessler informed executives from Samsung Electronics, SK Hynix, and Taiwan Semiconductor Manufacturing Company (TSMC) earlier this week that the Biden administration is reviewing whether to terminate these exemptions. The waivers had enabled companies to export U.S. chipmaking tools and software to facilities in China, despite existing export controls.
The news triggered a wave of selling across the semiconductor sector. The VanEck Semiconductor ETF (SMH) dropped around 1%, while individual stocks including Nvidia, Qualcomm, and Marvell Technology fell roughly 1%. TSMC shares declined more than 2% as investors reacted to the potential disruption to its China-based operations.
The Commerce Department’s move signals a possible escalation in the ongoing tech tensions between Washington and Beijing. Although the two nations recently agreed on the framework of a second trade deal during meetings in London, the Biden administration has continued to tighten restrictions on advanced chip technology exports, citing national security concerns.
“These waivers were a key lifeline for chipmakers operating in China,” said Adam Kinley, an analyst at EastWest Securities. “If revoked, companies like TSMC and Samsung could face operational hurdles, reallocation costs, and potentially a sharp drop in revenue tied to China-based production.”
The semiconductor industry has already been navigating growing restrictions. In 2022 and 2023, the U.S. introduced sweeping controls limiting China’s access to advanced AI chips and tools required for high-end semiconductor fabrication. The latest efforts to close loopholes reflect Washington’s concern that Beijing could exploit foreign chip factories operating inside China to circumvent those controls.
The impact of these export curbs is already being felt. Nvidia, a leading AI chipmaker, disclosed last month that U.S. government restrictions on its China-bound H20 chips contributed to an estimated $8 billion hit in sales. CEO Jensen Huang described the China market—once worth $50 billion to U.S. chip companies—as “effectively closed.”
The potential rollback of waivers could further strain U.S.-China trade relations, particularly as China has denounced these restrictions as discriminatory. While the current policy discussions are ongoing and no final decision has been made, the possibility of more sweeping limits has introduced fresh volatility into the sector.
Investors and chipmakers alike will be watching closely for any formal announcements in the coming weeks. A reversal of the waivers would force affected companies to reevaluate supply chains, consider shifting manufacturing operations out of China, and potentially delay production schedules.
In the near term, analysts expect heightened market sensitivity to any government signals or diplomatic developments related to U.S.-China tech policy. As Washington balances national security priorities with global economic interests, the semiconductor industry finds itself once again at the center of geopolitical risk.
