​Tech 5: Tech Stocks See Strong Q1 Inflows, Taiwan Earthquake Highlights Chip Supply Chain Risks

1. Tech stocks see third largest quarterly inflows

Data gathered by BoA and reported by Reuters shows that technology stocks experienced their third largest quarterly inflows on record in Q1, with a staggering US$18.6 billion in inflows during the period.

The S&P 500 (INDEXSP:.INX) and Nasdaq Composite (INDEXNASDAQ:.IXIC) both reached new heights in the first quarter, with the S&P 500 hitting 5,000 for the first time ever in February, and the tech-heavy Nasdaq achieving a new milestone later that same month, closing at 16,091.92 on February 29. Tech stock investment continued this past week alongside substantial flows into cash and bonds. BoA said tech stocks saw inflows of US$1.1 billion for the week up until Wednesday (April 3), a positive indicator of continued investor confidence in the sector.

2. Bitcoin price retreats

Bitcoin ended the month and quarter at around US$71,300, up about 16.5 percent from the previous month.

Fineqia International (CSE:FNQ,OTC Pink:FNQQF) research analyst Matteo Greco told the Investing News Network in a note that March marked the seventh consecutive month of gains for the world’s first cryptocurrency.

Bitcoin saw a significant surge in value towards the end of 2023, driven by optimism surrounding the possible approval of spot Bitcoin exchange-traded funds (ETFs) in the US. Since their approval on January 10, these funds have attracted significant investment, with approximately US$12.1 billion in total inflows by the end of March. BlackRock’s (NYSE:BLK) iShares Bitcoin Trust (NASDAQ:IBIT) was the biggest winner, having amassed inflows of around US$13.9 billion.

Despite its strong performance in March, Bitcoin experienced a pullback in early Q2, with prices dropping by 8.25 percent and fluctuating between US$65,000 and US$66,000 midweek. However, a rebound on Thursday (April 4) pushed the price to just shy of US$70,000. At the time of this writing, Bitcoin was trading at US$67,588.

3. Taiwan struck by 7.4 magnitude earthquake

On Wednesday, Taiwan's east coast was struck by a 7.4 magnitude earthquake, followed by multiple aftershocks. The earthquake, the island nation’s largest in 25 years, caused the collapse of several buildings and threatened more damage to infrastructure due to landslides. It also led to the loss of 10 lives and left hundreds injured or displaced.

Fortunately, Taiwan was uniquely prepared following the 7.7 magnitude “Chi-Chi” earthquake of 1999, and managed to keep the extent of the destruction relatively low thanks to an early warning system and modern seismic building codes. Nevertheless, tremors felt across the island and even as far away as Hong Kong and Shanghai forced businesses to evacuate, including Taiwan Semiconductor Manufacturing (TSMC) (NYSE:TSM), a keystone of Taiwan’s economy.

TSMC produces around 90 percent of the world's advanced semiconductor chips, and its temporary closure on Wednesday highlights its crucial role in driving various technologies worldwide, such as smartphones and artificial intelligence (AI) applications. Its advanced manufacturing capabilities are indispensable in meeting the increasing demand for AI processors, as it is the primary contract chipmaker for major AI players like NVIDIA (NASDAQ:NVDA).

David Bader, professor and director of the Institute for Data Science at New Jersey Institute of Technology, called the risk of overconcentration in the global semiconductor supply chain an “existential threat.”

“The entire world now works on semiconductor devices powering everything that we do, whether we’re driving in our cars, whether we are talking on our cell phones, even our military defenses or weapons systems, airlines, everything uses chips,” he wrote on his website. “If production were to halt … this would be devastating.”

4. Tesla reveals plans for summer release of Robotaxi

Following Friday's (April 5) news that Tesla (NASDAQ:TSLA) will not release a US$25,000 electric vehicle (EV), CEO Elon Musk took to X, formerly known as Twitter, to announce the upcoming unveiling of Tesla’s Robotaxi on August 8.

Tesla's share price has dropped by 34 percent year-to-date and sales have slowed, mainly due to increasing competition within the EV market as well as declining demand. One of the notable players in this market is BYD (OTC Pink:BYDDF,SZSE:002594), a Chinese multinational company that overtook Tesla as the world’s top seller of EVs in Q4 2023. One of BYD’s models, the BYD Dolphin Mini, has a starting price of 99,800 yuan. While BYD is not currently available in the US, its expansion into the European market suggests that the company may be interested in entering the US market in the future. In the US, safety concerns associated with Tesla’s vehicles have negatively impacted its sales.

Reuters broke the news of Tesla’s plan to scrap the development of a cheaper vehicle, which may have resulted in shares falling as much as 6.2 percent. Musk responded to the report, which cites anonymous sources, by simply posting on X: “Reuters is lying (again).” He did not call out any specific inaccuracies. After news broke of Tesla's August 8 Robotaxi launch, shares recovered slightly from their earlier fall, jumping 3.2 percent in after-hours trading.

5. Trade and Technology Council agrees to three more years of cooperation

The US and the European Union (EU) wrapped up a two day session of their Trade and Technology Council (TTC) in Belgium on Friday. In a 12 page joint statement, both entities agreed to extend their cooperation in identifying disruptions in the semiconductor sector for another three years, specifically focusing on “legacy” chips from China.

Established in 2021, the TTC was formed as a medium for transatlantic cooperation between the US and members of the EU to deepen trade and economic relations and better coordinate approaches to global trade and tech issues.

While not as advanced as the latest semiconductors, legacy chips have a wide range of uses and are found in vehicles, aircraft, military systems and broadband due to their cost-effectiveness and compatibility with existing technology.

By sharing market intelligence and consulting on plans, the US and EU hope to mitigate the influence of China's non-market policies and practices on the global supply chain. In particular, a report by the Office of the US Trade Representative accuses China of setting trade barriers, creating interference in foreign business and intellectual property theft.