ASML dodged tightening US sanctions against China – shares rose 7%

Netherlands-based ASML, which makes chip manufacturing equipment, could be exempt from new restrictions on exporting its products to China, Reuters reported today. As a result, the company’s shares rose in price by 7%.

Image source: asml.com

The United States is considering tightening sanctions on China and other countries by allowing its regulators to control the supply of equipment that uses American technology. But U.S. allies that supply chipmaking equipment, including the Netherlands, South Korea and Japan, will be exempt from having to comply with the new regulations. The initiative will affect countries such as Israel, Taiwan, Singapore and Malaysia – in Taiwan, for example, the headquarters and factories of TSMC, the world’s largest semiconductor contractor, are located.

The draft Foreign Direct Supply Act states that any company that produces semiconductor products and uses at least some American technology in doing so will not be able to export these products to China. This rule will also apply to foreign companies, since they often use American solutions.

Netherlands-based ASML is a major player in the conductor industry because its equipment is used to make the world’s most advanced chips – its shares jumped 7% after the Reuters report. The securities of Tokyo Electron, a Japanese manufacturer of semiconductor equipment, increased in price by the same 7%. Shares of Korean SK hynix and Samsung also increased in price, although the latter’s growth may also be associated with the positive financial report published today.