KUALA LUMPUR, March 28 (Bernama) -- Bursa Malaysia closed lower today on profit-taking after a strong three-day rally, and investor sentiment was further shaken in the late afternoon session following news of an earthquake in Myanmar with tremors felt in neighbouring Thailand, said Rakuten Trade Sdn Bhd equity research vice-president Thong Pak Leng. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) slid 1.44 per cent or 22.08 points to 1,513.65, its intraday low, from Thursday’s close of 1,535.73. The benchmark index opened 4.16 points lower at 1,531.57 and hit an intraday high of 1,533.52 during the midday session. On the broader market, decliners outpaced gainers 563 to 395, while 408 counters were unchanged, 1,106 untraded, and 133 suspended. Turnover slipped to 2.25 billion units valued at RM2.13 billion from 2.52 billion units worth RM2.41 billion on Thursday.
Key Takeaways:
Positive Momentum in Chip Stocks: Semiconductor stocks saw a significant rally recently, with Advanced Micro Devices Inc. (AMD) leading the charge. The Philadelphia Semiconductor Index (SOX) surged by 3%, and most of its components, including AMD, outperformed the broader market. This optimism comes amid reports that the U.S. may narrow the scope of some of its planned tariffs, providing relief to investors.
The Tariff Situation: While the narrowing of tariffs is positive for chip stocks, semiconductor companies still face uncertainty due to ongoing AI export restrictions. These rules, issued during the final weeks of the Biden administration, could add bureaucratic hurdles and limitations on AI chip sales, particularly affecting companies like NVIDIA (NVDA).
The Trump Administration's Stance on AI Chips: Ben Reitzes, an analyst at Melius Research, points out that the Trump administration might continue the "AI Diffusion Rules" that restrict AI-related chip exports to certain countries, including China. This could hinder chip makers like NVIDIA, which rely heavily on global sales for their AI products. The uncertainty surrounding these restrictions is a major factor weighing on the sector's performance.
NVIDIA Under the Microscope: NVIDIA, a key player in the AI chip market, is especially vulnerable to these export controls. While the Trump administration has not yet acted on this, analysts speculate that the U.S. might maintain a hardline stance to limit China’s access to AI technology.
Impact on Other Chipmakers: Some companies are less affected by the export restrictions. For example, Broadcom (AVGO) and Marvell Technology (MRVL) have less exposure to the AI market, with Broadcom’s chips primarily serving U.S.-based customers and Marvell’s business insulated from the worst of the restrictions.
AMD’s Outlook: AMD, on the other hand, is seeing positive developments. Recently, Oracle (ORCL)announced a multibillion-dollar contract with AMD for its MI355X graphics processing units (GPUs), potentially expanding its foothold in the AI accelerator space. This partnership could indicate a promising future for AMD’s AI chip family, especially as they gear up for future releases like the MI400 in 2026.
Investor Insight: While the rally in semiconductor stocks is encouraging, investors should remain cautious, particularly with the looming uncertainty around AI export restrictions. Companies like NVIDIA are at risk due to their exposure to global markets, especially in the face of geopolitical tensions. AMD, however, looks to benefit from its growing relationships with major tech players like Oracle. For investors looking to dip back into semiconductor stocks, it’s crucial to consider these ongoing regulatory developments, especially as the situation around AI chips evolves.
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