Shares of major global semiconductor equipment companies saw a significant increase on Thursday following reports that the U.S. is considering imposing sanctions on China’s chip industry that may not be as strict as previously thought. ASML, a key player in the semiconductor industry, experienced a 3.6% surge in early European trading, while Tokyo Electron saw a more than 6% rise in Japan.
According to a report by Bloomberg, the U.S. is exploring new measures to limit the sale of semiconductor equipment and AI memory chips to China. However, these potential restrictions are expected to be less severe than earlier proposals. The U.S. Commerce Department’s Bureau of Industry has yet to comment on the report.
One notable development is that the U.S. may not add as many suppliers to the export blacklist, including key Chinese company ChangXin Memory Technologies. This decision could have a positive impact on ASML, as the exclusion of this competitor may result in higher sales for the Dutch semiconductor equipment manufacturer in China.
ASML has faced challenges due to the ongoing technology battle between the U.S. and China, given its critical role in the chip supply chain. The company produces essential machines used by chipmakers to manufacture advanced semiconductors. While these machines have not been exported to China due to existing export controls, recent restrictions imposed by the Dutch and U.S. governments have further limited ASML’s ability to sell certain machines to China.
Analysts at Jefferies noted that ASML had previously anticipated a 30% decrease in revenue from China next year. However, with the latest developments excluding certain Chinese companies from sanctions, ASML’s sales in China may not decline as much as initially projected.
The potential sanctions being considered are likely to target Chinese firms involved in manufacturing semiconductor equipment, rather than the chip-producing factories themselves. This approach could benefit ASML and other foreign semiconductor equipment suppliers that provide machinery to chip manufacturing plants.
Overall, the news of softened restrictions on China’s chip industry has had a positive impact on chip suppliers’ shares, signaling a potential shift in the ongoing semiconductor trade dynamics between the U.S. and China. Investors will be closely monitoring further developments in this space to assess the implications for the global semiconductor market and key industry players like ASML.
