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Chipmaker routine swallows TSMC, Samsung with $240 billion wiped out

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(Bloomberg) — Chip-related stocks tumbled in Japan, South Korea and Taiwan, wiping more than $240 billion from the sector’s global market value after the Biden administration restricted China’s access to semiconductor technology.

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Taiwan’s semiconductor manufacturer, the world’s largest chip maker, fell 8.3% on Tuesday. Also, Samsung Electronics Co. and Tokyo Electron Ltd out of concern that US efforts to ensure international cooperation will hamper their ability to export to China.

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Selling spread in the currency markets. The South Korean won fell more than 1.6% against the dollar while the Taiwanese dollar fell 0.7% amid losses in stock markets.

Felix Lee, Equity Analyst at Morningstar Inc. , in a note: “We believe that short-term uncertainty about foundry demand will increase, as China is the second largest cloud computing market in the world.” “The new shock could dampen sentiment in a sector already suffering from weak consumer electronics demand.”

These restrictions are expected to have far-reaching effects. For companies with factories in China – including non-US companies – the rules will create additional obstacles and require government approval. The move is also set to fuel a spillover effect across the sector’s supply chain and add to a growing list of challenges for tech stocks including a hawkish Federal Reserve and tensions across the Taiwan Strait.

The US announced the export restrictions on Friday, and there have been suggestions that similar measures may be rolled out to other countries to ensure international cooperation. The announcement led to a two-day defeat of more than 9% in the Philadelphia Stock Exchange’s semiconductor index which saw Monday’s close at its lowest since November 2020. Markets in Korea, Japan and Taiwan were closed that day for the holidays.

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Samsung lost up to 3.9%, the most in a year. SK Hynix Inc. South Korea, one of the world’s largest memory chip manufacturers with facilities in China – is part of a supply network that sends components around the world. Its shares fell 3.5% before paring losses.

The current downturn has already wiped out more than $240 billion of chip stocks worldwide since Thursday’s close, according to data compiled by Bloomberg.

David Wong, an analyst at Nomura Holdings, wrote in a note Monday that the restrictions represent a “major setback for China” and “bad news” for global semiconductors. He also wrote that China’s resettlement efforts may be “in jeopardy because it may not be able to use the advanced foundries in Taiwan and Korea”.

Shares of Chinese chipmakers extended their recent losses on Tuesday, with Morgan Stanley saying broader restrictions around supercomputers and multinational capital investments in China could be “devastating.”

Chinese state media and officials have responded to Biden’s move in recent days, warning of economic consequences and fueling speculation about a possible retaliation.

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“The latest US move will prompt China to move faster in boosting the domestic chip industry,” said Omdia analyst Akira Minamekawa. “Japanese companies must be ready for the future – perhaps in a decade or two – when they will lose all Chinese customers as a result of the current tension that is speeding up Chinese efforts.”

The measures are aimed at halting China’s efforts to develop its own chip industry and boost its military capabilities. They include restrictions on the export of some types of chips used in artificial intelligence and supercomputing and tighter rules on the sale of semiconductor manufacturing equipment to any Chinese company.

The United States is seeking to ensure that Chinese companies do not transfer technology to the country’s military and that China’s chip makers do not develop the ability to make advanced semiconductors themselves.

Chae Minseok, an analyst at Korea Investment & Securities, wrote in a report. “It is impossible to sustain the chip industry without the use of sophisticated equipment.”

(updates throughout)

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MicroStrategy is at its lowest level since 2020 after the sales were revealed

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(Bloomberg) — Shares of MicroStrategy touched their lowest level since August 2020 after the enterprise software company, which in recent years has been known as the largest buyer of bitcoin, revealed its first sale of the token.

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The stock fell 1.1 percent to $136.63 on Thursday, down 75 percent this year. Bitcoin rose less than 1% to around $16,590 and is believed to have fallen 64% since the start of the year.

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In a filing on Wednesday, MicroStrategy said it acquired approximately 2,395 Bitcoin between the beginning of November and December 21 through its subsidiary MacroStrategy, and paid out approximately $42.8 million in cash. It then sold 704 of the tokens on Dec. 22 for a total of about $11.8 million, citing tax purposes, before buying another 810 of them two days later.

Matt Malley, chief market strategist for Miller Tabak + Co. Step down as CEO. This news means they don’t seem to want to do that anytime soon.”

Overall, MicroStrategy held about 132,500 bitcoins worth over $4 billion USD as of December 27th. The company paid an average purchase price of $30,397 per bitcoin.

“Given MicroStrategy’s $2.4 billion in leverage, we believe the company may have a lot of leverage over Bitcoin, and may face some liquidity risk,” Jefferies analyst Brent Thiel wrote in a note on Wednesday. Thill has an “underperform” rating on the stock and a price target of $110.

Over the years of the pandemic, MicroStrategy has become well known for its Bitcoin takeovers, largely led by Saylor. Earlier this year, Saylor stepped down from that role and now serves as CEO at the company and continues to lead its bitcoin strategy.

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MicroStrategy was trading around $120 before Saylor first announced the company’s Bitcoin purchases in 2020. The stock reached an all-time high of $1,315 in February 2021.

(Updates to include the stock’s closing price in the second paragraph.)

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Bankman-Fried May File Petition in New York Federal Court Next Week Before Judge Louis Kaplan By Cointelegraph

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Former FTX CEO Sam Bankman-Fried is set to appear in court on the afternoon of January 3 to enter a lawsuit over two counts of wire fraud and six counts of conspiracy against him related to the collapse of cryptocurrency exchange FTX, according to Reuters. mentioned on December 28, citing court records. Bankman-Fried will appear before District Judge Lewis Kaplan in Manhattan.

Judge Kaplan was appointed to hear the case on December 27 after the original judge in the case, Ronnie Abrams, Resigned herself because of connections between FTX and the law firm Davis Polk & Wardwell, where her husband is a partner. The company provided advisory services to FTX in 2021.