Chip stocks in Asia tumbled on Thursday following a tech selloff on Wall Street amid reports the U.S. may be considering tighter export restrictions.
Shares of — the world's biggest chip supplier — fell as much as 4.3% in Asia trade, before paring losses. The company reported Thursday came in better than expected.
TSMC's suppliers also took a hit, with Japanese machinery companies slumping almost 9% while fell more than 8%.
Other chip-related stocks such as lithography materials provider and industrial water company also dropped, by 4.53% and 3.13% respectively.
A report Wednesday said the Biden administration may be thinking of clamping down on firms exporting their critical chipmaking equipment to China, further inflaming tensions between the two superpowers.
"The chip companies have been the darlings of the market. There's digitization in almost everything that we touch. Any sort of tariffs and curbs to trade are going to impact these chip companies. We're seeing it across the globe," said Ayako Yoshioka, senior portfolio manager at Wealth Enhancement Group.
South Korean chip stocks were not spared. slid by nearly 2%, while tumbled nearly 5% and SK Square plunged nearly 10%.
But Yoshioka said buying opportunities still remain for long-term investors.
"The market moves quite a bit on sentiment and headlines alone, especially in the short term. On the long term, you really have to focus on the promise of [artificial intelligence] and what it can really do for so many businesses and consumers," she told CNBC's " ."
"Policy hurdles can definitely create a catalyst for a negative unwind in markets, earnings can also be another catalyst as expectations are high going into earnings season ...That can potentially create some negative pressure on some stocks in the short term," Yoshioka explained.
The foreign direct product rule, or FDPR, allows the U.S. to place controls on foreign-made products even if they use very little American technology, which can hinder non-U.S. companies.
The spillover effect on Asian tech stocks came on the back of large declines on Wall Street from and , which saw losses of 12% and 7% respectively.
, which produces machines that create the world's most advanced chips, closed more than 12% lower, despite reporting better-than-expected .
, , , and ended the trading day more than 7% down.
Separately, U.S. Republican presidential candidate Donald Trump told Wednesday that . He also blamed Taiwan for taking "about 100%" of America's chip business.
— CNBC's Arjun Kharpal contributed to this report.
