Export Restrictions: Impact on Semiconductor Stocks

Immediate Impact on Semiconductor Companies

Export restrictions have led to increased product costs and potential margin impacts for Qualcomm, while TSMC has adjusted its market growth forecasts. Intel highlights efficiency disruptions in wafer fabs, and Nvidia reports no significant immediate impact but warns of future uncertainties.

"While capacity constraints have largely abated, we expect to continue to see product cost increases from certain of our key semiconductor wafer suppliers, which, without corresponding increases in the prices of our products, could negatively impact our margins." --- (QCOM, sec filing, 2024/Q2)

"We lowered our forecast for the 2024 overall semiconductor market, excluding memory, to increase by approximately 10% year-over-year, while foundry industry growth is now forecast to be mid- to high-teens percent, both are coming off the steep inventory correction and/or base of 2023. Having said that, we continue to expect 2024 to be a healthy" --- (TSM, earning call, 2024/Q1)

"Expedites negatively impact the efficiency of a wafer fab. Semiconductor manufacturing is an extremely precise process that requires wafers to move through the fab at very specific intervals." --- (INTC, status update, 2024/04/02)

"We have not experienced significant impact or expense to our business; however, if the conflict is further extended, it could impact future product development, operations, and revenue or create other uncertainty for our business. First Quarter of Fiscal Year 2025 Summary" --- (NVDA, sec filing, 2025/Q1)

"For example, if any key supplier of technologies and intellectual property to the semiconductor industry was sold to one of our competitors, it could negatively affect our ability to procure or license such technologies and intellectual property in the future, at all or upon acceptable terms, which could have wide-ranging impacts on our business and operations." --- (QCOM, sec filing, 2024/Q2)

Supply Chain Disruptions

Customers, especially in the automotive sector, are proactively managing supply chain disruptions by reassessing their supply sources and strategies (TXN). External factors like economic uncertainty and credit market disruptions also impact demand and relationships (LRCX). Export license issues could significantly disrupt supply chains and product shipments (KLAC).

"Thank you. Dave Pahl: Sure. Yes. Thanks again, Tom. I would say that many customers and especially those in automotive, as they went through and dealt with the disruptions that they had in supply chains actually we are very thoughtful in looking at where their supply is coming from, what things that they can do differently well beyond just carrying extra days of inventory." --- (TXN, earning call, 2024/Q1)

"However, factors outside of our control, including uncertainty in the global economy and the semiconductor industry, as well as disruptions in credit markets, have in the past, are currently, and could in the future, impact customer demand for our products, as well as our ability to manage normal commercial relationships with our customers, suppliers, and creditors." --- (LRCX, sec filing, 2024/Q3)

"The possible negative effects on our future business of export licenses not being granted could be material and could disrupt our supply chain and product shipment, and impair our ability to complete product development in a timely manner, or our ability to support existing customers of covered products or supply customers of covered products outside the impacted regions, and may require us to transition certain operations out of one or more of the identified countries." --- (KLAC, sec filing, 2024/Q3)

"We didn't because you had chip inflation because of shortages. You had freight and logistics inflation because of all kinds of supply disruption and shipping and transportation disruptions." --- (LRCX, conference, 2024/05/29)

"Over the last couple of years, because of some of the challenges related to supply chain a couple of years ago and how that moved and translated into what happened in 2023, I think it skewed or created some noise in some of the relative numbers, but I think on a normalized basis, we feel pretty good about how we're positioned as we move forward into this year and into next year as you start to see more investment at the leading edge, which tends to drive the highest process control intensity, the part of the market where KLA tends to participate the most." --- (KLAC, conference, 2024/05/21)

Strategic Adjustments by Companies

TSMC, AMD, Intel, Qualcomm, and Micron are making strategic adjustments to navigate export restrictions. TSMC is investing in advanced technologies, AMD is launching new platforms with strategic partners, Intel is leveraging government incentives and external foundries, Qualcomm is managing potential losses, and Micron is securing customer prepayments.

"TSMC's pricing strategy is strategic, not opportunistic to reflect the value that we provide.Today, we are investing heavily in leading-edge specialty and advanced packaging technologies to support our customers' growth and enable their success. If customers do" --- (TSMC, earning call, 2024/Q2)

"So today, we're announcing early access for our next gen Versal platform. More than 30 of our strategic partners are already developing edge AI devices powered by our new single chip Versal solution, and we are incredibly excited about the opportunity to drive AI at the edge and see significant opportunities to extend our embedded market leadership with these new technologies." --- (AMD, event transcript, 2024/06/03)

"In addition to SCIP, other elements of Smart Capital include: 1) government incentives to provide a level playing field for building a geographically diverse and resilient semiconductor supply chain; 2) build-out of shell space, which gives the company the flexibility to determine how and when to bring additional capacity online; 3) customer participation in internal capacity build-outs as Intel executes its foundry strategy; and 4) strategic and opportunistic use of external foundries." --- (INTC, press release, 2024/06/04)

"Any losses or impairment charges that we incur related to strategic activities will have a negative impact on our results of operations and financial condition, and we may continue to incur new or additional losses related to strategic assets or investments that we have not fully impaired or exited." --- (QCOM, sec filing, 2024/Q2)

"The increase in cash provided by operating activities for the first nine months of 2024 as compared to the first nine months of 2023 was primarily due to a smaller net loss in the current year adjusted for non-cash items, the effect of an increase in accounts payable and accrued expenses and an increase in other current liabilities largely due to approximately $600 million of customer prepayments to secure product supply, partially offset by an increase in receivables." --- (MU, sec filing, 2024/Q3)

Technological Adaptations and Innovations

NVIDIA, Micron, TSMC, Qualcomm, and AMD are driving technological adaptations and innovations in the semiconductor industry. NVIDIA focuses on energy-efficient accelerated computing, Micron on deep learning and brain-inspired optimization, TSMC on nanosheet-based technology, Qualcomm on adaptive strategies, and AMD on AI-driven breakthroughs.

"NVIDIA is at the forefront of energy efficient accelerated computing. General purpose computing performance scaling has slowed. Customers are turning to NVIDIA pioneered accelerated computing as the path to sustainable and cost effective innovation." --- (NVDA, event transcript, 2024/06/26)

""The industry needs fundamentally new approaches capable of scaling. For that reason, we developed Hala Point, which combines deep learning efficiency with novel brain-inspired learning and optimization capabilities."" --- (MU, press release, 2024/05/02)

"We also introduce A16 as our next nanosheet-based technology, featuring Super Power Rail, or SPR, as a separate offering. TSMC's SPR is an innovative, best-in-class backside power delivery solution that is forcing the industry to incorporate another backside contact scheme to preserve gate density and device with flexibility." --- (TSM, earning call, 2024/Q2)

"Our success depends in part on our ability to adapt to such change and compete effectively; and such change and competition could result in decreased demand for our products and technologies or declining average selling prices for our products or those of our customers or licensees." --- (QCOM, sec filing, 2024/Q2)

"Together with our partners, AI from AMD helps make more imagination possible, innovation, breakthroughs, and healing possible." --- (AMD, event transcript, 2024/06/03)

Future Outlook and Predictions

The future outlook for semiconductor stocks under export restrictions is marked by significant uncertainty. AMD highlights the unpredictability of future events and the risks involved. Micron plans to align future spending with demand growth, while Intel anticipates a stronger second half of the year.

"These forward-looking statements speak only as of the date hereof or as of the dates indicated in the statements and should not be relied upon as predictions of future events, as we cannot assure you that the events or circumstances reflected in these statements will be achieved or will occur." --- (AMD, sec filing, 2024/Q1)

"The timing of future WFE spend in these fabs will be managed to align supply growth with expected demand growth. I will now turn it over to Mark for our financial results and outlook." --- (MU, earning call, 2024/Q3)

"So we feel very comfortable that the second-half outlook is quite strong for the business, first-half a bit weaker, but we think it's very understandable, very explainable and the second-half outlook that will be very comfortable for every business across" --- (INTC, earning call, 2024/Q1)

"Such statements are subject to certain known and unknown risks and uncertainties, many of which are difficult to predict and generally beyond AMD's control, that could cause actual results and other future events to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements." --- (AMD, press release, 2024/04/30)