Key international semiconductor equipment companies’ stock prices surged Thursday in response to a report indicating that the United States is contemplating sanctions on China’s chip industry that fall short of previous demands.
TakeAway Points:
- The U.S. is mulling sanctions on China’s chip industry that fall short of previous measures, according to a report that caused shares of major international semiconductor equipment companies to surge on Thursday.
- Around 3.6% more ASML was traded in Europe in the early going. In Japan, where it trades, Tokyo Electron was up over 6 percent.
- ASML produces machines that chipmakers require to manufacture the most advanced semiconductors; however, those machines have not yet been exported to China due to various export controls.
Shares of key chip suppliers jump as U.S. reportedly considers toned-down China curbs
Shares of key global semiconductor equipment firms jumped on Thursday after a report that the U.S. is considering sanctions on China’s chip industry that stop short of earlier proposals.
According to the report, ASML was around 2.9% higher in afternoon trade in Europe. Tokyo Electron closed 6.7% higher in Japan, where it trades.
Bloomberg reported on Wednesday that Washington is considering further measures to restrict sales of semiconductor equipment and AI memory chips to China, but that the new rules could stop short of earlier proposals that were seen as stricter.
The U.S. Commerce Department’s Bureau of Industry declined to comment on the Bloomberg report.
U.S to add chip suppliers to Entity List
The U.S. is now considering adding fewer suppliers to Chinese technology giant Huawei to an export redlist known as the Entity List. According to the report, one key Chinese firm that won’t be added is ChangXin Memory Technologies, a memory company and potential rival to the likes of SK Hynix and Samsung.
According to the report, analysts at Jefferies said ASML had previously guided toward a 30% decline in its revenue from China next year. The exclusion of that company could mean that ASML’s sales in China “decline by less than expected next year,” Jefferies said Thursday.
The company has been caught in the crosshairs of the U.S. and China’s technology battle over semiconductors because of the Dutch firm’s critical position in the chip supply chain.
ASML operations
ASML produces machines that chipmakers require to manufacture the most advanced semiconductors. Those machines have not yet been exported to China due to various export controls. More recently, the Dutch and U.S. governments have imposed restrictions that make it more difficult for ASML to export some of its less advanced machines to China.
The company sells its machines to “fabs,” or plants that actually manufacture chips, such as Taiwan’s TSMC as well as SMIC in China. Any rules that hit demand or directly target semiconductor manufacturers will have a negative impact on ASML.
The Bloomberg report suggested that further sanctions under consideration would target Chinese firms making semiconductor manufacturing equipment rather than the factories that actually make the chips. This is also a positive for ASML and other foreign semiconductor equipment firms that sell to fabs.
