The Impact of Geopolitical Tensions on the Semiconductor Market

The ongoing tensions between China and the West are significantly affecting the semiconductor industry, as illustrated by ASML Holdings, a key player in chip-making technology. The company has seen its revenue from Chinese customers drop from 45% to an anticipated 20% due to increasing pressure from the U.S. government to restrict technology sales to China. This decline is prompting a reevaluation of ASML's market position and valuation, particularly as the U.S. seeks to bolster domestic semiconductor production through initiatives like the CHIPS Act. The ramifications of these geopolitical dynamics highlight the complexities within the semiconductor supply chain and the challenges firms face as they navigate international relations.