Three Things (11/11)

TSMC halts chip flow to China

Policy shift … Taiwan Semiconductor Manufacturing Company (TSMC) is cutting off China’s access to its most advanced AI chips, according to new reporting from The Financial Times. Starting Monday, TSMC will no longer make high-end chips, at 7 nanometers or smaller, for Chinese clients without U.S. approval. This restriction, driven by ongoing U.S. sanctions, could be a big blow to major Chinese tech players like Alibaba (BABA) and Baidu (BIDU), which rely on TSMC for cutting-edge chips to power their AI ambitions.

This comes amid an investigation into how a TSMC-manufactured chip recently ended up in a Huawei AI device despite strict U.S. export controls on the Chinese telecom giant. The U.S. Commerce Department’s probe is fueling Washington’s determination to close any loopholes that might allow China to access the latest tech. Huawei, already on a U.S. blacklist, would need special licenses to receive tech like TSMC’s high-performance chips, which is unlikely under current regulations.

TSMC’s policy shift adds to the mounting restrictions against Chinese access to advanced tech, as U.S. officials grow increasingly concerned about export control enforcement. Over the past year, similar restrictions have hit companies like Nvidia and AMD, limiting their shipments to China. TSMC, the world’s largest contract chipmaker, is staying aligned with these controls as tensions over tech between the U.S. and China escalate. 

Meanwhile, TSMC is preparing to open its new Arizona fabrication plant this December, a major milestone in U.S.-Taiwan tech relations. Both President Joe Biden and President-Elect Donald Trump are expected to attend the grand opening, underscoring the plant’s political and economic significance.

Gen Z, Millennials Fuel Doom Spending

Throw it in the bag … In the wake of last week’s election, a new report suggests Americans are “doom spending”—making impulse purchases to cope with lingering economic and political anxieties. A survey of Intuit (INTU) customers reveals that 27% of U.S. shoppers are “doom spending,” with significant traction among Gen Z and millennials, with 37% and 39% of each group using spending to counter feelings of insecurity. 

This behavioral phenomenon first became common during the pandemic, explains Bankrate analyst Ted Rossman, as financial concerns and bleak outlooks led young adults to find comfort in spending. Concerns over rising living costs and inflation top the list of reasons behind this spending, with 55% of participants listing cost of living, and 43% citing inflation fears.

Psychology Today sheds light on “doom spending” as a reaction to stress and fear, explaining how these emotions can trigger impulsive financial decisions. Marketers often leverage this by appealing to emotional triggers, encouraging purchases as a form of coping. However, this spending habit can lead to long-term debt and mental health strain.

Later this week, U.S. retail sales data will be released, providing a look at how these trends may shape the economy post-election.

This week on Wall Street

Earnings roll on … This week, we’ll get a snapshot of the live events and entertainment industry from Live Nation (LVY), a glimpse into the housing market from Home Depot (HD) and Better (BETR), eCommerce trends from Shopify (SHOP) and Alibaba (BABA), and a quarterly update from Disney (DIS). Monthly inflation data drops on Wednesday.

Today: Live Nation Entertainment (LYV)

Tues. 11/12: 23andMe Holding Co (ME), Blade Air Mobility (BLDE), Dave Inc (DAVE), Flutter Entertainment (FLUT), Home Depot (HD), Honest Company (HNST), Life360 (LIF), Marathon Holdings (MARA), Rocket Companies (RKT), Rocket Lab (RKLB), Spotify (SPOT), Shopify (SHOP), Topgolf Callaway Brands (MODG), Tyson Foods (TSN)

Weds. 11/13: Better Home & Financing (BETR), Cisco Systems (CSCO), Dole Plc (DOLE), Sonos (SONO); plus, Consumer Price Index and Core CPI

Thurs. 11/14: JD.com (JD) and Walt Disney Co (DIS); plus, Initial Jobless Claims, Producer Price Inflation (PPI) MoM, Fed Chair Jerome Powell speaks to the Federal Bank of Dallas

Friday 11/15: Alibaba (BABA); plus, Retail Sales MoM data and Import Price Index

One more thing: Online educational company Chegg (CHGG) has lost 99% of its value as students switch to ChatGPT, a free and instant alternative for homework help. Even though Chegg introduced its own AI tools, it’s still struggling to win back subscribers and stay relevant in a market now dominated by ChatGPT’s fast answers. The company reports earnings tomorrow after the closing bell.

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