US Exempts Allies from Chip Restrictions on China

Shares of Dutch semiconductor equipment manufacturer ASML experienced a significant increase of up to 10% on Wednesday, following a Reuters report indicating that the company may be exempt from new U.S. export restrictions on chipmaking equipment destined for China. The report suggests that while the U.S. is contemplating an expansion of the foreign direct product rule, key allies such as Japan, the Netherlands, and South Korea would be excluded from these restrictions. The proposed U.S. regulations would primarily affect exports to China from countries like Israel, Taiwan, Singapore, and Malaysia. Notably, Taiwan is home to TSMC, the world's largest chip manufacturing facility. This development contrasts with a previous Bloomberg report that indicated these countries would be included in the expanded rules, highlighting the evolving landscape of international semiconductor trade. The foreign direct product rule stipulates that any company producing semiconductor-related products using even a minor component of American technology may face restrictions on exporting those goods to China. This legislation poses a significant challenge for foreign companies that depend on U.S. technology for their operations. In addition to ASML, shares of Tokyo Electron, a Japanese semiconductor equipment maker, rose by more than 7% following the news. South Korean memory chip manufacturers Samsung and SK Hynix also saw their stock prices increase, reflecting a broader positive sentiment in the semiconductor sector amid these developments.