By Adam Whittaker
Shares in semiconductor-equipment manufacturers rose after a report that Japan, the Netherlands and South Korea will be excluded from new U.S. rules designed to restrict China's access to chip-making technology.
Shares in ASML in Amsterdam were up 5.9% to EUR853 in late morning trade in Europe. In Japan, Tokyo Electron closed up 7.4% at JPY31,020. Shares of U.S. peers Applied Materials, Lam Research and KLA Corp. were up around 3% in premarket trading.
Smaller Dutch chip equipment makers ASM International and BE Semiconductor Industries were up 4.7% and 1%, respectively.
The Biden administration will strengthen export control provisions next month under the foreign direct product rule to prevent foreign countries exporting chip-making equipment to China, Reuters reported, citing unnamed sources. The U.S. Commerce Department didn't immediately respond to a request for comment.
The Netherlands, Japan and South Korea are among the U.S. allies excluded under the draft rules due to be published next month, while Israel, Taiwan, Singapore and Malaysia will have restrictions placed upon them, according to Reuters.
In mid-July, shares in ASML and Tokyo Electron fell considerably after a report from Bloomberg said that the U.S. government was considering tougher export controls on chip makers exporting to China. At the time, analysts from Citi said the decline in ASML stock was an overreaction and that less harmful incremental restrictions were more likely.
ASML and Toyko Electron's early Wednesday share rebound is the market breathing a sigh of relief that their businesses might escape significant disruptions, AJ Bell Investment Director Russ Mould wrote in a note following Wednesday's report of country-based exemptions.
The Foreign Direct Product rule allows the U.S. government to place extraterritorial restrictions on products using American technology. It has been used in recent years to restrict China's supercomputer industry from accessing the advanced computing chips needed to develop artificial intelligence capabilities.
The Biden Administration is also set to lower the threshold at which foreign items are subject to U.S. controls, and is reportedly set to implement rules which would bring products into scope if they contain just one chip using U.S. technology, Reuters reported.
The full scope of the draft rules are unclear, but the U.S. is likely to tighten rules on the servicing of semiconductor-manufacturing equipment, RBC Capital Markets analysts wrote in a note to clients. This will likely include the supply of certain spare parts like vacuum valves and pumps if they contain U.S technology, they added.
Write to Adam Whittaker at adam.whittaker@wsj.com
(END) Dow Jones Newswires
July 31, 2024 06:25 ET (10:25 GMT)
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