Intl Conference on Economics, Finance & Business, London

THE IMPACT OF THE SEMICONDUCTOR EXPORTS BANS TO CHINA ON THE STOCK PRICES IN TAIWAN'S SEMICONDUCTOR INDUSTRY

BI-HUEI TSAI, PEI-PEI WANG

Abstract:

This study finds that the U.S. sanctions on Chinese semiconductors result in significantly negative abnormal returns for Taiwan's semiconductor industry, including the upstream IC design sector and the midstream manufacturing sector. The U.S. sanctions enable investors to expect the difficulty of Taiwan’s IC design industry in obtaining orders from Chinese companies. Investors sell the stock of Taiwan’s IC design industry, so the stock prices of Taiwan’s IC design industry decline substantially. Negative abnormal returns are generated during the announcement of U.S exports bans to China. The impact of U.S. sanctions on Chinese semiconductors is obviously more significant on Taiwan's upstream IC design industry than on the midstream manufacturing and downstream packaging and testing industries. Conversely, the gap between IC manufacturing and packaging industries is small.

Keywords: Semiconductor; Event Study; Stock Prices; Sanctions; Abnormal Return