A chip made by Taiwan Semiconductor Manufacturing Company
Semiconductor stocks got whacked on Friday as investors digested hotter-than-expected inflation and increased tensions between Ukraine and Russia.
Chipmakers had been boosted by increased demand during the pandemic and have generally reported strong earnings and outlooks in the past month.
But investors are looking for less-risky stocks in an inflationary environment, and Reuters reported on Friday that chipmakers could face supply issues for key components including semiconductor-grade neon if Ukraine is invaded.
Among the biggest losers was AMD, which fell 10% on Friday to a price of $113.14 per share. It’s down about 30% from its peak last November. Earlier this week, the chipmaker announced it had secured government approval for its purchase of Xilinx, which also fell about 10% on Friday.
Marvell, a fast-growing company that makes chips for networking and storage, fell over 7% on Friday.
Nvidia also dropped over 7% on Friday and is down 30% from its peak last November. Its big acquisition for chip design firm Arm fell apart this week under regulatory scrutiny. It reports fourth-quarter earnings on Wednesday.
Qualcomm fell over 5% and is now down over 11% so far in 2022. Intel fell over 2% and Broadcom also ticked over 3% lower.
The fall in chip stocks was a sector-wide slump and many smaller names also fell on Friday. The VanEck Vectors Semiconductor ETF, which trades under the ticker SMH, closed down over 5% on Friday.
The drop came amid a rough day for the markets as the technology-heavy Nasdaq Composite fell 2.78% and the Dow Jones Industrial Average fell over 500 points.
Stocks dropped sharply in the afternoon after a jump in oil prices apparently tied to increased concerns about Russia invading Ukraine.
Treasury yields rose on Friday, suggesting that investors are also closely following the possibility that the Fed could hike interest rates faster than previously expected. Goldman Sachs analysts said this week that it expects seven rate hikes in response to inflation, which surged 7.5% in January, according to CPI data released this week.